Question 5 (20%) Your company is considering the options to fully automate a production line. These machines are expected to cut down labour costs as given below as Annual Income. The machines all have a lifetime of 6 years. The company has a minimum attractive rate of return (MARR) of 6.5%. The following data is available for these new machines: Annual Operation and Initial Salvage Annual Machine value Cost Maintenance costs Income $24,500 $6,600 $775 $3,900 1 $61,000 $38,000 $33,300 $1,050 $1000 $990 $5,700 $4,800 $2,300 $13,300 $11,100 $8,500 M2 4 a) Calculate the Net Present Worth (NPW) of each alternative. b) Using incremental IRR analysis, rank (1-4) the four alternatives based on economic feasibility. Question 6 (25%) For the alternatives given in Question 5, assume that this company has only $85,000 to invest now. It is required to select the most economically feasible alternative or group of alternatives. Left-over cash can be invested in another alternative to increase production or in buying bonds. The details of these bonds are as follows: Face value of each bond is $1,500 It can be bought at face value in the bond market Bond coupon rate is 5% Bond maturity is 4 years after purchase Bond revenues are received every quarter At the end you receive face value of the bond. You can use the NPW values to make a comparison between different alternatives. MARR is 6.5%. You can buy more than one bond ($1,500 each). However, you cannot invest in one particular alternative twice (e.g., you cannot have two instances of alternative A). Clearly state all scenarios for investing the available $85,000 along with calculations of NPW