Question 2 A. An ice cream vendor considers buying a soft serve machine that costs P2, 000. The machine will last for two years and is expected to produce 1,000 ice cream cones per year. During the first year, each ice cream cone is expected to sell for P2 each; labour and raw material costs are expected to be P0.90 per ice cream (all other operating costs are assumed negligible). During the second year, each ice cream cone is expected to sell for P2.50; labour and raw materials are expected to be P1.00 per unit; and maintenance costs are expected to be P290. Scrap value is zero and all revenues and costs are at the end of the year. (i) Should the ice cream vendor buy the machine if interest rate is 12 percent? Justify your answer and clearly show your workings [3 Marks] (ii) What would your answer be to (i) if the interest rate is 8 percent? [3 Marks] (iii) What do your answers to (i) and (ii) above suggest about the relationship between interest rate and the decision to invest? [2 Marks]