Question Completion Status: Question 1 (16 marks, 34 minutes) Thermotech is a high-technology company that manufactures sophisticated testing instruments for evaluating microcircuits. These instruments sell for $3,500 each and cost $2,450 in variable costs to manufacture. An essential component of the company's manufacturing process is a sealed vacuum chamber where the interior approaches a pure vacuum. The technology of the vacuum pumps that the firm uses to prepare its chamber for sealing has been changing rapidly. On June 1, 20x0, Thermotech bought the latest in electronic high speed vacuum pumps, a machine that allowed the company to evacuate a chamber for sealing in only six hours. The company paid $600,000 for the pump. Recently, the manufacturer of the pump approached Thermotech with a new pump that would reduce the evacuation time to two hours. The new pump would also cost $800,000. Thermotech's management is considering the acquisition of this new pump and has gathered the following information: the new pump would be installed on December 31, 20x2 and placed in service January 1, 20x3, and the costs for installing, testing, and debugging the new pump will be $12,000. The pump would belong to CCA Class 10. The rate for Class 10 is 30% in 20x3 and is expected to decrease to 25% for 20x4 onwards. The salvage value of the pump is estimated to be $80,000 after four years. if the new pump is purchased, arrangements will be made to sell the old pump for $75,000. at the current rate of production, the new pump's greater efficiency will result in annual cash savings of $240,000. the new pump will require more supplies inventory. It is estimated that an additional $50,000 will have to be invested in supplies over and above the levels required by the old pump. Thermotech is able to sell all the testing instruments it can produce. Because of the increased speed of the pump, output is expected to increase by 30 units in 20x3, 50 units in both 20x4 and 20x5 and 70 units in 20x6. For all additional units produced, the manufacturing costs would be reduced by $150 per unit. Thermotech has a weighted average cost of capital of 16%. Required Do you recommend that Thermotech purchase the new pump. Show detailed calculations, Save All Answers Close Window Save and Submit Chick Save and Submit to save and submit. Click Save All Answers to save all answers, V480C lenovo