This exercise parallels the machine-purchase decision for the Mendoza Company that is discussed in the body of the chapter. Assume that Mendoza is exploring whether to enter a complementary line of business. The existing business line generates annual cash revenues of approximately $4,800,000 and cash expenses of $3,720,000, one-third of which are labor costs. The current level of investment in this existing division is $12,650,000. (Sales and costs of this division are not affected by the investment decision regarding the complementary line.)