PROBLEM 14-31 Simple Rate of Return and Payback Analyses of Two Machines [LO3, LO4] Westwood Furniture Company is considering the purchase of two different items of equipment, as described below: Machine A A compacting machine has just come onto the market that would permit Westwood Furniture Company to compress saw dust into various shelving products. At present the sawdust is disposed of as a waste product. The following information is available on the machine: a. The machine would cost $420,000 and would have a 10% salvage value at the end of its 12-year useful life. The company uses straight-line depreciation and considers salvage value in comput- ing depreciation deductions. b. The shelving products manufactured from use of the machine would generate revenues of $300,000 per year. Variable manufacturing costs would be 20% of sales. c. Fixed expenses associated with the new shelving products would be (per year): advertising, $40,000: salaries, $110,000; utilities, $5,200; and insurance, $800