(45) PART 2: Financial Management [20] Question 8 Given the recent scare of the Listeria outbreak in the pork market, you are considering to upgrade your meat packing line to impress your clientele with more state of the art packaging Your market research shows that you are currently packing 100 000kg of 1 kg fresh meat packs, and that you can expect an annual growth of 10%/year on your volumes for the next 5-years. You also find a second-hand MAP-packaging machine on which you can make an offer-to- purchase from the current owner. It is estimated that this new packaging machine will actually save you R2/kg of product in spite of its purchasing price. The machine also has a remaining estimated 5-year lifespan. Once the MAP machine reaches the end of its 5-year remaining life span it will have a scrap value of R20 000. As an investor you are expecting an annual return of 15% on your investments. 8.1 What would be a fair offer-to-purchase price? 10 8.2 Assume we bought the machine for R1000 000, If you were going to use the Reducing balance method, please calculate the depreciation schedule/amounts for the next five years