d) The Core Division has developed a new "lean burn engine that is sold exclusively to external customers. The production of this engine will utdise the spare capacity of the division and will eam the division a contribution of 40 per machine hour. The demand is so high for the engines that their production could also use 9,000 machine hours that are currently used to make 1,000 of the engines that are transferred to the Solo Division Calculate the minimum and maximum transfer prices that could now be charged for the motorcycle engines that are internal transfers to the Core Division (7 marks) e) The Zoopa Group is considering investing in three machines but only has sufficient funds in the budget to pay for two. Prost forecasts and cost of investment for each machine are provided below. Profit forecasts Machine 11 C000 Machine 2 Machine 3 S000 E000 65 80 110 300 425 650 Cost of investment Capital charges for the group are calculated at 6%. Required: Calculate the Return on investment and the Residual Income for each machine and comment on the outcome. (4 marks) (total 25 marks) d) The Core Division has developed a new "lean burn engine that is sold exclusively to external customers. The production of this engine will utdise the spare capacity of the division and will eam the division a contribution of 40 per machine hour. The demand is so high for the engines that their production could also use 9,000 machine hours that are currently used to make 1,000 of the engines that are transferred to the Solo Division Calculate the minimum and maximum transfer prices that could now be charged for the motorcycle engines that are internal transfers to the Core Division (7 marks) e) The Zoopa Group is considering investing in three machines but only has sufficient funds in the budget to pay for two. Prost forecasts and cost of investment for each machine are provided below. Profit forecasts Machine 11 C000 Machine 2 Machine 3 S000 E000 65 80 110 300 425 650 Cost of investment Capital charges for the group are calculated at 6%. Required: Calculate the Return on investment and the Residual Income for each machine and comment on the outcome. (4 marks) (total 25 marks)