Question 6 SHAH Ldd makes Product YY, which can be sold for $22 per unit. Variable costs of production and variable sales overhead are currently at $8.50 per unit and \$3.50 per unit respectively. Fixed production overhead costs are absorbed on a unit basis of $4.00 per unit. A new robotic machinery could be bought-in to improve production costs. It would cost 5600,000 now, but it can result in a reduction of variable production cost by $2.00 per unit and variable sales overhead by $1.00 per unit. Fixed production overhead costs to be paid however would increase by $30,000 in the first two years and in the third, fourth and fifth-year increase by $50,000 per annum, as a direct consequence of buying the new robotic machinery. The robotic machine has an expected operational life of 5 years and a re-sale value of $20,000 at that time. Annual sales of Product YY is estimated at 90,000 units. The target discounted payback period is 3.5 years. ACC4245(FYAugst 2022. Page 8 of 8 Required: If SHAH Ldd expects to earn at least 10% p.a. from its investment, should the robotic machinery be purchased based on the following capital investment appraisal methods: a) Ascertain the cash payback period for the investment. (5 marks) b) Ascertain the discounted payback period and the net present value of the investment. (13 marks) c) Ascertain the internal rate of retum (IRR) of the investment. (5 marks) d) Should the investment be undertaken based on all the calculations made above. (2 marks) (Total: 25 marks)