When Mr. Ding L. Berry, president and chief executive of Berry, Inc., first saw the company and product V's Contribution Margin income statement below, he flew into his usual rage: "Product V is losing the company too much money! I want to see more investment options" Company Product Total v Sales $250,000 $75,000 Variable Expenses 119,000 35,000 Contribution Margin 131,000 40,000 Fixed Product Expenses 98,000 37,000* Fixed General overhead 32,900 10,500 Operating Income (los) $100 ($7,500) *The Fixed Product expenses could be eliminated if the product lines to which they are traced were discontinued Required: 5 marks a) If Product Vis dropped, compute the effect of the company's Operating Income Hint -use a Segmented Margin Statement. Would you recommend that product V be dropped? Explain your answer b) You have researched purchasing equipment to produce Product z. The initial investment in equipment is $100,000 and its annual net cash flow in is expected to be $25,000/year over the life of the equipment. The equipment is expected to last 5 years with no salvage value. However, we will be able to trade in some old equipment for $5,000 when we purchase the new equipment. i) Calculate the Payback Period ) If the company wanted a payback period of at least 5 years, would you buy the equipment? I) Calculate Simple Rate of Return? iv) If the company wanted a Simple Rate of Return of 15%, would you invest in the equipment