Proctoring Enabled: MH Lab 4 Capital Budgeting i Saved Westwood Furniture Company is c You have FIVE MINUTES remaining to complete your work below 12 Mc Help Save & Exit Submit Machine A. A compacting machine has just come onto the market that would permit Westwood Furniture Company to compress sawdust into various shelving products. At present the sawdust is disposed of as a waste product. The following information is available on the machine: 00:03:25 eBook a. The machine would cost $534,000 and would have a 10% salvage value at the end of its 13-year useful life. The company uses straight-line depreciation and considers salvage value in computing depreciation deductions b. The shelving products manufactured from use of the machine would generate revenues of $440,000 per year. Variable manufacturing costs would be 20% of sales. c. Fixed expenses associated with the new shelving products would be as follows (per year): advertising, $111,200; salaries, $145,000; utilities, $4,500; insurance, $2,300. Graw Hill Machine B. A second machine has come onto the market that would allow Westwood Furniture Company to automate a sanding process that is now done largely by hand. The following information is available: a. The new sanding machine would cost $305,500 and would have no salvage value at the end of its 13-year useful life. The company would use straight-line depreciation on the new machine. b. Several old pieces of sanding equipment that are fully depreciated would be disposed of at a scrap value of $13,500 c. The new sanding machine would provide substantial annual savings in cash operating costs. It would require an operator at an annual salary of $6,980 and $3,550 in annual maintenance costs. The current, hand-operated sanding procedure costs the company $99,000 per year in total. Westwood Furniture Company requires a simple rate of return of 15% on all equipment purchases. Also, the company will not purchase equipment unless the equipment has a payback period of four years or less. Required: 1. For machine A: 1 D