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3.2. Using the information provided below, answer the following questions. INFORMATION Radasys Manufacturing Limited (RML) is appraising the purchase of a new machine, costing R15

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3.2. Using the information provided below, answer the following questions. INFORMATION Radasys Manufacturing Limited (RML) is appraising the purchase of a new machine, costing R15 million, to replace an existing machine which is near the end of its useful life, and which has no resale value. The forecast levels of production and sales for the goods to be produced by the new machine, which has a maximum capacity of 500000 units per year, are as follows: The new machine will incur fixed annual maintenance costs of R1 500000 per year. Variable costs are expected to be R30.00 per unit and selling price is expected to be R60 per unit. These costs and selling price estimates are in current price terms and do not take account of general inflation, which is forecast to be 5% per year. It is expected that the new machine will need replacing in four years' time due to advances in technology. The resale value of the new machine is expected to be R2 000000 at that time, in future value terms. The purchase price of the new machine is payable at the start of the first year of the four-year life of the machine. Working capital investment of R1 500000 will already exist at the start of the four-year period, due to the operation of the existing machine. This investment in working capital is expected to increase in nominal terms in line with the general rate of inflation. RML pays corporate tax one year in arrears at an annual rate of 30% and can claim 25% reducing balance tax-allowable depreciation on the purchase price of the new machine. The company has a real after-tax weighted average cost of capital of 6% and a nominal after-tax weighted average cost of capital of 11%. Required: Using a nominal terms net present value approach, evaluate whether purchasing the new machine is financially acceptable. (12 QUESTION 6 Gitiras 6.1. Uning the informabien provised below, anverer the following queviont. INosannow Anoind: gnats: Finate places? Amaka: product. MFosention places! profuct B.2. Stuey the ielormaten provided below and annwer the follorwing gunibien. INGokahnow Proouct B 12500und Resulet: Sinas: Dinavin

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