ACC202 Co. is considering replacing an existing production line with a new line that has a greater output capacity and operates with less labour than the existing line. . . Existing Production line The old line was constructed 5 years ago for $200,000. It had an expected useful life of 10 years and an estimated market value of zero at the end of its life. If you sell the old line now, it is expected to be sold for $80,000. New Production line You have just completed a $30,000 feasibility study for a new production line. The new line would cost $800,000, has a 5-year life and is expected to be sold for $100,000 at the end of its life. Because the new line is more automated, it would require fewer operators, resulting in a saving of operating expense of $40,000 per year. The new line is however expected to have a negative impact on other side of the business and an annual operating cost of this side effect is expected to be $20,000 per year. Additional sales with the new machine are expected to result in additional net cash inflows of $150,000 per year. If ACC202 Co. invests in the new line, a one-off investment of $10,000 in additional working capital will be required. This investment will be recovered in the terminal year. . ACC202 Co.'s production lines are depreciated using the straight-line method, the tax rate is 30% and the opportunity cost of capital is 10%. i) Calculate free cash flows from Year 0 to Year 5. ii) Calculate the standard payback period. If the cut-off year is 3 years, should ACC202 Co. accept the new project and why? iii) Calculate the NPV. Should ACC202 Co, accept the new project and why? iv) Establish the equation from which the IRR is solved. Assuming the IRR=6.67%, should ACC202 Co. accept the project and why? v) Under what conditions will the Internal Rate of Return (IRR) rule and Net Present Value (NPV) rule give the same accept/reject decision with no conflict? Question 2: (5 marks) Discuss challenges and issues when implementing activity-based costing (ABC) system in a typical manufacturing business