A food processing cosppany intends to expand its current. Fevels of operation thraugh a new liese. The now tine will cost K=1p10million, bringing total investament to Kshs 24 million. The exiating line is Chetgoerhegi cost far the two lines will be Kshs 12,090,000pm Other operating cust will inereage and = million reipectively and this will increase by 40% each with new line. The receivabies and payabies ure entimated at 205 si and 15% of total sales reppectively for both with and without new line. The investor will finanse the new iavesiment withi i Kshs 10 millioc loan. The loan will be repaid in equal instaitments for 5 years starting from year one, with an interest rate of 10% p.a. on raducing balance. Txx rate is 20\%. Asuume annual depreciation is 1% of coit of new line. The new fine will be disposed at end of the 5th year at 5% of purchase price. Disecant rate is by. 1. Develop the eash flows for the now investment for the 5 ycam (8Milss) ii. Hlistrate the final (net) cash Hows on a Cash flow diagram (2Mlks) iii. Using the NPV determine if it is worth imvesting in new line (3Mks) Discuss the two types of replacement stidy undertaken to handle asset replecement problems (4Miks) Highlight and explain the principles of etugineering economics (4Miks) A food processing cosppany intends to expand its current. Fevels of operation thraugh a new liese. The now tine will cost K=1p10million, bringing total investament to Kshs 24 million. The exiating line is Chetgoerhegi cost far the two lines will be Kshs 12,090,000pm Other operating cust will inereage and = million reipectively and this will increase by 40% each with new line. The receivabies and payabies ure entimated at 205 si and 15% of total sales reppectively for both with and without new line. The investor will finanse the new iavesiment withi i Kshs 10 millioc loan. The loan will be repaid in equal instaitments for 5 years starting from year one, with an interest rate of 10% p.a. on raducing balance. Txx rate is 20\%. Asuume annual depreciation is 1% of coit of new line. The new fine will be disposed at end of the 5th year at 5% of purchase price. Disecant rate is by. 1. Develop the eash flows for the now investment for the 5 ycam (8Milss) ii. Hlistrate the final (net) cash Hows on a Cash flow diagram (2Mlks) iii. Using the NPV determine if it is worth imvesting in new line (3Mks) Discuss the two types of replacement stidy undertaken to handle asset replecement problems (4Miks) Highlight and explain the principles of etugineering economics (4Miks)