7 7 yr 11- A company is considering buying a new piece of machinery. A 10% interest rate will 44 be used in the computations. Two models of the machine are available. ) Machine Machine 11 1 Initial cost $80,000 $100,000 End-of-useful-life salvage value, 20,000 25,000 S 15,000 first 10 years 20,000 Annual operating cost 18,000 thereafter Useful life, in years 20 25 MACRS class (a) Determine which machine should be purchased, based on equivalent uniform annual cost. (b) What is the capitalized cost of Machine I? (c) Machine lis purchased and a fund is set up to replace Machine I at the end of 20 years. Compute the required uniform annual deposit. (d) Machine I will produce an annual saving of material of $28,000. What is the rate of return if Machine I is installed? (e) What will be the book value of Machine I after 2 years, based on 60% bonus depreciation with the balance using MACRS? (1) What will be the book value of Machine Il after 3 years, based on straight-line depreciation? (g) What would be the MACRS depreciation in the third year for Machine