Question Three: Baze (Nig.) Itd is contemplating the purchase of a new machine for N150, 000 which will complement the use of an older machine which cost N100, 000 two years ago and has a current book value of N60,000. The following information are also given: 1) The annual sales are estimated at 5000 units with sales price of N32/unit. The unit cost is N24 made up of N8 direct labour, N5 direct materials and Nil fixed cost respectively. 2) The new machine will have an expected useful life of 5 years and a residual value of N10,000. 3) Labour resource is in short supply and will therefore be diverted from other works in house at N1.50/hr. for four hrs. 4) Working capital requirements would be N10,000 in year one, but will rise to N7,500 from the second year upwards until the end when it will fully be recovered 5) Baze's cost of funds is 18% Required: a) Ignoring tax and depreciation, compute the NPV of this investment and Advise BEZEE management accordingly 50 Marks