Kober Company is in the business of manufacturing electrical fans. Kober's costing system provides the following costs for a new model of fan if it is produced with excess capacity that is currently available. Direct material Direct labour Manufacturing overhead-cost pool A Manufacturing overhead-cost pool B $20 30 20 40 $110 An alternative means of production for the new model of fan is a computer integrated manufacturing (CIM) system. A CIM system would require a current investment of $20 million, an investment of $15 million in 3 years' time and a further investment of $10 million in 5 time. The total CIM investment could be sold for $4 million at the end of the new fan's life which is expected to be 10 years Following are projected costs for the new model of fan if it is produced with the CIM system. Direct material Direct labour Manufacturing overhead-cost pool C Manufacturing overhead - cost pool D Total cost per fan $20 10 15 25 $70 Kober Company expects to sell each fan for $250 and estimates annual sales demand of 10,000 units. REQUIRED: Calculate the present value of the capital expenditures required to allow Kober to use CIM for production of the fan. (6 points) (b) Calculate the present value of the production cost savings from CIM for production of the fan. (6 points) A recommendation to Kober and a discussion of any assumptions used in your analysis. (4 points)