value of $15;;. The new equipment will immediately reduce net working capital [WC] by $1,2. [5] The current equipment requires annual fixed cash costs {including overhead and operating] of $4,15ti; while the new equipment requires $3,28D. [6] Manufacturing pulp using the current equipment incurs the following costs [per tonne] in addition to the costs stated in {5): labour $33.5; material $35.5, variable overhead $14.25. The corresponding figures for the new equipment are $12.45; $30.20 and $12.55; respectively. All candidates are required to answer the following questions. The committee chair asks you to prepare the correct solutions so the answers by the candidates can be checked. Assume there is no ination during the whole period and both machine can be replaced at the end of their respective project life. (a) Should TPM upgrade to the new technology or continue to operate using its current equipment? [in] 1Will your answer be different if neither project can be replaced at the end of their respective life? (c) Conduct risk evaluations [using the sensitivity analysis] of adopting the new technology by considering the following factors: output using the new tectmology may be overestimated; the reduction in WC may be overestimated; due to continuous development in the industry; the equipment may worth less than $15;t]D;D{I in five years; the labour cost per tonne may be underestimated. Note: 1four answers to this part will be different from those of other groups depending on what values you choose. Each group only needs to choose one particular value for each of these variables. (d) What types of factors (nancial andr'or nonfinancial} TPM must also consider when evaluating the new technology