Help See & E Sum Check my we 2 Problem 14.46 (Algo) Equipment Replacement and Performance Measures (LO 14-2) 5 Oscar Clemente is the manager of Forbes Divion of inca manufacturer of biotech products. Forbes Dion which has 35 million in assets, manufactures a special testing device. At the beginning of the current al. Forbes invested $35 min automated equipment for test machine assembly. The division's expected income statement at the beginning of the year was as follows Sales et Operating costs Variable we all ca Depreciation Newest Other Division operating profit 2.100 7,200.000 1,40 0001 13.540.000 A sales representative from LSI Machine Company approached Oscar in October Strasfor $5 min a new assembly machine that offers significant improvements over the equipment Oscar bought at the beginning of the year. The new equipment would expand Olvision output by 10 percent while reducing cash fixed costs by 5 percent. It would be depreciated for accounting purposes overat year life. Depreciation would be not of the $500.000 salvage value of the new machine The new equipment meets Pers 20 perceed cost of capital criterion If Oscar purchases the new machine, it must be installed prior to the end of the year. For practical purposes thought, Oscar can ignore depreciation on the new machine because it will not go into operation the start of the next yea The old machine, which has no salvage vloe must be disposed of to make room for the new machine Pirt has a performance evaluation and bonus plan based on ROI The return includes any losses on disposal of equipment trivestment is computed based on the end of year balance of assets. netbook value ignore taxes. Requirt av Forbes Division's ROL Oscar does not acquire the new machine (Enter your answer as a percentage rounded to decimal place fie. 32.11.) b. What is Forbes Division's Rof this year Oscar acquires the new machine? (Enter your answer as a percentage rounded to 1 decimal place le, 32.1)) c. If Oscar acquires the new machine and operates according to specifications, what Rot is expected for next year? (Enter your answer as a percentage rounded to 1 decimal place (le, 32.11.) Check my w 2 Problem 14-46 (Algo) Equipment Replacement and Performance Measures (LO 1 2) points Skipped Oscar Clemente is the manager of Forbes Division of Pitt, Inc., a manufacturer of biotech products. Forbe Division, which has $3.5 million in assets, manufactures a special testing device. At the beginning of the current year, Forbes invested $3.5 million in automated equipment for test machine assembly. The division's expected income statement at the beginning of the year was as follows. $15,500,000 eBook 2,100,000 7,200,000 Sales revenue Operating costs Variable Fixed (all cash) Depreciation New equipment Other Division operating profit 1,460, eee 1,200, eee $ 3,540,000 A sales representative from LSI Machine Company approached Oscar in October. LSI has for $8.5 million a new assembly machine that offers significant improvements over the equipment Oscar bought at the beginning of the year. The new equipment would expand division output by 10 percent while reducing cash fixed costs by 5 percent. It would be depreciated for accounting purposes over a 4-year life. Depreciation would be net of the $500,000 salvage value of the new machine. The new equipment meets Pitt's 20 percent cost of capital criterion. If Oscar purchases the new machine, it must be installed prior to the end of the year. For practical purposes, though. Oscar can ignore depreciation on the new machine because it will not go into operation until the start of the next year. The old machine, which has no salvage value, must be disposed of to make room for the new machine. Pitt has a performance evaluation and bonus plan based on ROI. The return includes any losses on clisposal of equipment. Investment is computed based on the end-of-year balance of assets, net book value. Ignore taxes. Required: a. What is Forbes Division's ROI I Oscar does not acquire the new machine? (Enter your answer as a percentage rounded to 1 decimal place (le, 32.1).) b. What is Forbes Division's ROI this year if Oscar acquires the new machine? (Enter your answer as a percentage rounded to 1 decimal place fi.e., 32.1).) C. If Oscar acquires the new machine and it operates according to specifications, what Rol is expected for next year? (Enter your answer as a percentage rounded to 1 decimal place (le, 32.1).) l. HOI b ROL I ROL