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Question 4: Inflation (13 marks) An Ontario-based parts manufacturer is considering adding capability to their plant in order to grab a share of the marketplace for a key component used in electric vehicles. They wish to decide whether this is a sound investment based on a 10-year study period. The estimated cash flows related to this project are the following: Cash flow type Description Initial cost Overhaul cost at the end of year 5 Salvage value at the end of year 10 Material cost per unit Labour cost per unit Revenue per unit Amount $10,500,000 $3,300,000 $2,000,000 $15.00 / unit $5.75 / unit $30.00 / unit Actual Actual Real Real Real They use a Current/Actual MARR of 8% and inflation is predicted to average 1.85% per year over the next 10 years. a) Compute the Real MARR to two decimal place accuracy, i.e. 12.34%. b) Draw the cash flow diagram, let U = The number of units sold. If the level of sales is projected to be 180,000 units/year, should they invest in this project? Fully justify your recommendation by calculating the present worth of the investment. d) What is the breakeven level of sales (in units per year)