Muno plc is a Zimbabwean manufacturing company who are considering expansion into the UK. They have been looking at a possible factory site in the Midlands area in England. Due to the unstable political situation in the UK, they expect to sell the factory they buy after 5 years. The factory and machinery will be bought outright for 800,000. The factory building is worth 200,000 and machinery makes up the balance of the purchase price. The factory building will not fall in value during the project and the full amount will be recovered on sale. The machinery has a residual value of 27,000 The annual cash flows are as follows: - Sales revenue 195,000, increasing by 8.5% each year Running costs 8500, increasing by 6.5% each year. Other expenses include 650 per month for variable overheads. This value will increase by 2% every year. The company has a current cost of capital of 10%. Muno use a template for their calculations and this can be found on the link below; Capital Budgeting Template (click to download) a) Calculate the NPV (Net Present Value) of the new machine. Round off your answer to the nearest whole number with no sign. If the number is a negative value, include the minus sign e.g. -100000 Make use of the template provided above and do not round off your calculations until the final answer. Year o Year 1 Year 2 Year 3 Year 4 Year 5 Sales 0 195000 211575 229559 249071 270242 investment -800000 Residual Value 27000 Running Costs 8500 9053 9641 10268 10935 Other Expenses 650 Net Cashflows Discount Factor Present Value Net Present Value Decision Choose... b) Calculate the payback period for the new machine. Choose... Years Choose... months