Business Finance Question

Please i need it very urgent

Akesse and Sons is a firm specialized in security printing and has been in existence since April 2015 . At the last meeting of the Board. the Group Chairmarl, Mr Emmanuel Akesse made a strong presentation to buttress his point on the need to replace the machine being used for the printing of MicR cheque books. After the year 2027, the firm will no longer be interested in this line of business. The current machine has a useful life of 10 years and has been in use since the beginning of 2018. This was purchase at 6Hc30,000. The firm sells at GHc0.22 per booklet. This machine has the capacity of producing 30,000 booklets monthly and the firm always selis only 75% of total production, irrespective of the quantity produced in any particular year. In spite of some sceptical opinions expressed by a minority of the Board members, the Board is still convinced of the need to replace the machine with a more efficlent one, especially now that the firm is inundated with applications from fresh customers. The Procurement Manager has been tasked to shop around and look for all avallable options by which the firm could continue its cheque book production business and also to enable it select the option with the highest financial gain. Mangerald Ltd is the only reputable supplier of various printing equipment and has offered the following quotations for consideration by Akesse and Sons. OPTION 1 A new machine can be purchased outright for GHc20,000.00. This machine will have a useful life span of 6 years and cheque books will be produced @50,000 booklets per month and sold (9GHC 0.14 per booklet. Payment for the machine shall be made immediately. OPTION II OPTION III 60,000 booklets and sold at GHc0.14 per booklet. Annual payment In respect of the lease is GHc5,700 which must be discharged on the 1 in of January annually, starting from 2022. This amount. excludes GHc2,000.00 repairs and maintenance charges which shall be paid by Akesse and Sons after the last day of every year. ADDIIONAL NOTES 1. Assume today's date to be 1we January, 2022 2. Cost of Capital is 12% per annum 3. When a new machine is acquired, the existing machine would be sold for GHc2,200.00 and the proceeds recelved in 2024 4. All new machines bought would have a scrap value of GHc1,500.00 that would be recelved in 2027 5. Annual inflows would occur at the end of the appropriate year and accounted for in the following year except where specifically stated to the contrary 6. Ignore depreciation REQUIRED On the basis of the Net Present Value (NPV) model of investment appraisal, analyse all the options avallable to Akesse and Sons and advise with reason(s) which option they must select Akesse and Sons is a firm specialized in security printing and has been in existence since April 2015 . At the last meeting of the Board. the Group Chairmarl, Mr Emmanuel Akesse made a strong presentation to buttress his point on the need to replace the machine being used for the printing of MicR cheque books. After the year 2027, the firm will no longer be interested in this line of business. The current machine has a useful life of 10 years and has been in use since the beginning of 2018. This was purchase at 6Hc30,000. The firm sells at GHc0.22 per booklet. This machine has the capacity of producing 30,000 booklets monthly and the firm always selis only 75% of total production, irrespective of the quantity produced in any particular year. In spite of some sceptical opinions expressed by a minority of the Board members, the Board is still convinced of the need to replace the machine with a more efficlent one, especially now that the firm is inundated with applications from fresh customers. The Procurement Manager has been tasked to shop around and look for all avallable options by which the firm could continue its cheque book production business and also to enable it select the option with the highest financial gain. Mangerald Ltd is the only reputable supplier of various printing equipment and has offered the following quotations for consideration by Akesse and Sons. OPTION 1 A new machine can be purchased outright for GHc20,000.00. This machine will have a useful life span of 6 years and cheque books will be produced @50,000 booklets per month and sold (9GHC 0.14 per booklet. Payment for the machine shall be made immediately. OPTION II OPTION III 60,000 booklets and sold at GHc0.14 per booklet. Annual payment In respect of the lease is GHc5,700 which must be discharged on the 1 in of January annually, starting from 2022. This amount. excludes GHc2,000.00 repairs and maintenance charges which shall be paid by Akesse and Sons after the last day of every year. ADDIIONAL NOTES 1. Assume today's date to be 1we January, 2022 2. Cost of Capital is 12% per annum 3. When a new machine is acquired, the existing machine would be sold for GHc2,200.00 and the proceeds recelved in 2024 4. All new machines bought would have a scrap value of GHc1,500.00 that would be recelved in 2027 5. Annual inflows would occur at the end of the appropriate year and accounted for in the following year except where specifically stated to the contrary 6. Ignore depreciation REQUIRED On the basis of the Net Present Value (NPV) model of investment appraisal, analyse all the options avallable to Akesse and Sons and advise with reason(s) which option they must select