Highveld Industrial (Pty) Ltd is an engineering company providing specialised engineering products to a variety of industries. The company is considering replacing one of its CNC horizontal lathes with the latest model CNC horizontal lathe. The latest model uses more advanced technology and is more efficient, having a higher output capacity. Management appointed a project team to investigate and then recommend to the Executive Committee whether to retain the existing machine or sell it and replace it with the latest model. The team had the following information at its disposal: - The estimated useful life of the new machine is five years. - The current salvage value of the existing machine is R300 000 and at the end of five years it will be R80 000 . - The existing machine has cash tax value of R450 000 . - The new machine requires an investment of R1 200000 and will have salvage value of R300 000 at the end of its five-year useful life. - Current net cash inflows, generated from sales generated by the exiting machine, is R380 000 per year while net cash inflows from estimated sales using the new machine will be R460 000 per year. - The company will write off wear and tear on the existing machine in full at the end of year one. - The wear and tear on the new machine will be 50%,30% and 20% respectively in years 1 3 of the useful life of the machine. - Company management requires a minimum return of 12%. - The tax rate is 28% and there is a one-year lag in the payment of tax. The project team started its analysis of the two options and prepared the following tables but then got stuck. The team is unsure how to proceed with the analysis and requested your assistance to help them complete the analysis and present the EXCO with a recommendation. Required: Show all calculations and round off all amounts to the nearest whole number. 3.1 Assist the project team to make the necessary calculations using the information provided, then complete the tables above by inserting all the missing information in the space provided. 3.2 Recommend to the project team what decision the EXCO should make. (44) (2)