Investment Appraisal A bread company is looking to expand production. They can choose between one of the three following pieces of equipment: Initial Return Return Return Return Return Scrap costs Year 1 Year 2 Year 3 Year 4 Year 5 value Machine A Som 20m 20m 20m 20m 20m 10m Machine B 60m 40m 10m 10m 10m 10m 10m Machine C 100m 20m 25m 35m 50m 70m 20m Questions: 1. Calculate the total profit for cach machine after 5 years (including scrap value) 2. Calculate the payback period for each machine 3. Calculate the ARR for each machine 4. Using a discounted cash flow table, calculate the profit made by each machine at the end of year 5 (including scrap value) - interest rate 6% 5. Which machine, if any would you recommend the company purchase Frample 11 A component company has to replace an existing machine. They can chose between one of the three following options: Initial Return Return Return Return Return Scrap Year 1 Year 2 Year 3 Year 4 Year 5 Replace 50m 15m 15m 20m 20m 25m 10m machine Repair and Sm 10m 10m 10m 15m 15m upgrade machine Outsource 10m 10m 10m 12m 12m 15m production to another company costs value 0 0 Questions: 1. Calculate the total profit for each option after 5 years (including scrap value) 2. Calculate the payback period for each option 3. Calculate the ARR for each machine 4. Using a discounted cash flow table, calculate the profit made by each machine at the end of year 5 (including scrap value) - interest rate 6% 5. Which option you recommend the company purchase