on x * BUAD 264 x W Archibald X W Nadal Ltd. x 9 BUACC5933 X ) How may iz/attempt.php?attempt=15467168cmid=1056743&page=8 Copyright Info - Manual Login Link COVID-19 Resources Student Services on 9 ered ed out of ion Archibald Co. is planning to buy a machine that would allow it to automate certain procedures currently done manually by human workers. The machine would cost $70,000 and has an estimated life of 6 years. At the end of the 4th year, several key parts of the machine would have to be replaced at an installed cost of $8,000. The estimated salvage value at the end of the machine's life is $9,000. The machine would increase production by 7,000 units annually and each unit has a contribution margin of $2.50. The annual operating costs of the new machine would be $2,000. Annual direct labour costs of $20,000 would be eliminated through using the machine. If the company lays off the workers to save the direct labour costs, they would incur upfront severance costs of $50,000. The company's cost of capital is 13% which is an appropriate discount rate. Required: a) Compute the net present value of using the machine over the next 8 years (compared to not using the machine). (10 marks) b) Based on your result for Part A, should the company invest in the machine? (1 mark) Det e * BUAD 264 F x W Archibald C x W Nadal Ltd. m X S BUACC5933 X Y a) t.php?attempt=15467168cmid=1056743&page 8 ght Info - Manual Login Link COVID-19 Resources Student Services HICULE. LIELUPTy ruyur IC WUIRCI U JUVE LIC direct labour costs, they would incur upfront severance costs of $50,000. The company's cost of capital is 13% which is an appropriate discount rate. Required: a) Compute the net present value of using the machine over the next 8 years (compared to not using the machine). (10 marks) b) Based on your result for Part A, should the company invest in the machine? (1 mark) c) Another company used the net present value method to decide whether to purchase an investment. The net present value was zero. Should the company purchase the investment? Explain. (1 mark) Ff Ti. i BIO- E E Required