Annual membership fee - Iowa Chocolate Council $20,000 The new machinery is expected to be highly eicient, but its expected useful life is only 8 years, after which it will be scrapped. Salvage value is just 5% of the initial purchase price [including installation). Q1. What would you recommend to IMr. Perkins and why? 10 points Q2. Mr. Perkins also mentions that Mr. Jean St. Pierre, the President of the Iowa French-American Association, has advised him that there are a large number of French people in Iowa and other states who like the taste of yogurt made from unpasteurized milk. While it is allowable to sell unpasteurized milk in France, US Federal law does not allow it due to consumer safety concerns. The maximum penalty for selling unpasteurized dairy products is $25,000. Mr. Pierre has advised Mr. Perkins that he himself would pay a premium of at least 100% for unpasteurized yogurt, and he is condent that the Iowa market size would he at least 30,000 units per year and the US as a whole would be at least 200,000 units per year. Mr. Perkins has determined that Holstein would save $0.11 [power consumption and labor) per unit 'om skipping the pasteurization process. However, a new processing line would be required. The new machinery would cost $150,000 and its expected usell life would he 15 years, after which it will be scrapped. Salvage value is expected to 10% of the initial purchase price (including installation)- What would be your advice to hit. Perkins? Why? 10 points