QUESTION 3 [25 MARKS] SWZ is a manufacturing company that has many trading divisions. Return on Investment (ROI) is the main measure of each division's performance. Each divisional Manager's salary is linked only to their division's ROI. The following information relating to S division summarises the financial performance of the three years including the projected figures for 2023. 2021 2022 2023 N$000 N$000 NS000 Turnover 400 400 400 Cost of sales 240 240 240 Gross profit 160 160 150 Other operating costs 120 104 98 Operating profit 40 56 62 Capital invested as at the end of the year 400 320 256 Other operating costs include asset depreciation calculated at the rate of 20% per annum on a reducing balance basis. The figures shown in the above table for the capital invested as at the end of the year is the net book value of the division's fixed assets. At the beginning of 2023, the Manager of the S division is considering investing in an additional machine to boost production capacity. The new machine will cost N$100 000 with an expected life of five years depreciated using the same depreciation rate as the existing machinery on straight line method. The new machine will increase sales by 10% and costs by 3%. The divisional cost of capital is 8% per annum. The company has evaluated the investment and correctly determined that it has a positive Net Present Value (NPV) of N$24 536. REQUIRED MARKS a Calculate the return on investment (ROI) for three-year period (i.e., without 3 the new investment). Calculate ROI for 2023 after considering the new investment and comment 11 b) on whether Management of S Division will still go ahead with the new investment C Using Residual Income (RI) comment on whether Management of S 11 Division will go ahead with the new investment