JeriCo reported the following selected data for the year ended December 31, 2021:

Operating assets$3,200,000Operating Income After Tax175,000Tax rate30%

Included in the operating assets is an assembly machine which was acquired 2 years ago at a cost of $720,000. Although, this machine is still in good condition, management is considering replacing the existing assembly machine with an energy efficient machine. The current market value of the existing machine is $200,000 and the residual value is $20,000 if disposed at the end of 8 years. The following is the annual expenses associated with the existing assembly machine:

Annual expenses:Existing assembly machine

Direct materials $120,000

Direct labour 160,000

Quality Control 80,000

Factory Maintenance 30,000

Amortization 70,000

On January 5, 2022, a manufacturer is offering to sell a new assembly machine to JeriCo at a price of $870,000. The machine would last for 8 years and has an expected residual value of $30,000. The new machine will reduce $10,000 of inventory at the beginning; however, this amount will be tied up at the end of the 8thyear. With the new machine, JeriCo expects to reduce the prime costs by 25% and the manufacturing overhead costs by 30%. JeriCo has a minimum desired rate of return of 5% and a cutoff period of 4 years in evaluating the new project.The CEO would like you to advise him on this investment decision.

JeriCo financed its operating assets by borrowing 50% from a local bank, with 4% interest rate, raising 30% from new shareholders, with 8% required rate of return, and the rest from retained earnings, with 5% required rate of return.Please enter your answers without "$", and " , ".

Using the financial information from 2021,(Rounded to 1 decimal point.)

Calculate the effective cost of debt:%

Calculate the effective cost of new shares:%

Calculate the effective cost of retained earnings:%

Calculate the WACC:%

Using the financial information from 2021,

Calculate the Cost of Capital, using the WACC:$

Calculate the Economic Value-Add (EVA):$

Calculate the residual income (RI):$

Calculate the net initial investment:$

Calculate the total annual cost saving:$

Calculate the present value of the total annual cost savings(Rounded to the nearest dollar.):$

Calculate the total terminal value:$

Calculate the present value of the total terminal value(Rounded to the nearest dollar.):$

Net Present Value(Rounded to the nearest dollar.):

Calculate the point of indifference in terms of annual cash flow:(Rounded to the nearest dollar.)$

Determine the payback period:(Rounded to 4 decimal points.)years

Determine the IRR: (Rounded to 2 decimal points.)%

Calculate the incremental accounting income (or loss) for the first year if the new assembly machine is purchased and the old assembly machine is sold.

Calculate the incremental cost savings:$

Calculate the incremental depreciation expense:$

Calculate the gain/loss of the sale of existing machine:$

Calculate the incremental accounting income: