Question Four Rosy Bakeries specializes in the making of cakes and other pastries. The company is considering purchase of a new machine for putting icing and other toppings on pastries. Currently these processes are done manually. The machine costs sh. 465,000. Installation costs are estimated at sh. 15,000. The machine will have an economic life of 6 years but would require an overhaul at the end of the fourth year. The overhaul will cost sh. 37, 500. After six years, the machine could be sold for sh. 30,000. The company uses the straight line method of providing for depreciation and is in the 30% income tax bracket. The bakery estimates that it will cost sh. 70,000 per year to operate the new machine. The present manual method of putting pastries cost sh. 175,000 per year. In addition to reducing operating costs, the new machine will allow the bakery to increase its margin of sh. 30 per package and requires a 16% return on all investments in equipment. Using the NPV criteria, advise the company if it will be viable to acquire the new machine.