Q2 M23 - P2 65 Points Your firm is considering buying a new piece of production equipment. A 10% interest rate is used for all calculations at the company. Two models of the equipment are available. Machine Model I Initial Cost $80,000 End-of-Useful Life Salvage Value, S $20,000 Annual Operating Cost $18,000 Machine Model II $100,000 $25,000 $15,000 (first 10 years) $20,000 (thereafter) 25 years Useful Life 20 years (a) Based on EUAC, which machine should be purchased? (b) What is the capitalized cost of Machine I? (c) Machine 1 is purchased and a fund it set up to replace Machine 1 at the end of 20 years. Compute the required uniform annual deposit. (d) Machine I will produce an annual savings to the firm of $28,000. What is the rate of return if Machine I installed? (e) What will be the book value of Machine | after 2 years, based on Sum-of-Years'- Digits depreciation? (f) What will be the book value of Machine Il after 3 years, based on double declining balance depreciation? (g) Assuming that Machine Il is in the 7-year property class, what would be the MACRS depreciation in the third year