Answer Happy

Question 5 Use the information provided to answer the questions. Use the information provided below to calculate the following. Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5. Calculate the Payback Period of Project A (expressed in years, months and days). 5.1 5.1.1 Calculate the Accounting Rate of Return (on average investment) of Project B (expressed to two decimal places). 5.1.3 Calculate the Net Present Value of each project (with amounts rounded off to the nearest Rand). Use your answers from question 5.1.3 to recommend the project that should be chosen. Motivate your choice. 5.1.2 5.1.4 (3 marks) (5 marks) (6 marks) (1 marks)
Zeda Enterprises has the option to invest in machinery in projects A and B but finance is only available to invest in one of them. You are given the following projected data: Initial cost Scrap value Depreciation per year Net profit Year 1 Year 2 Year 3 Year 4 Year 5 Net cash flows Year 1 Year 2 Year 3 Year 4 Year 5 Additional information The discount rate used by the company is 12%. Project A R300 000 R40 000 R52 000 R20 000 R30 000 R50 000 R60 000 R10 000 Project B R300 000 0 R60 000 R90 000 R90 000 R90 000 R90 000 R90 000
5.2 Use the information provided below to calculate the Internal Rate of Return (expressed to two decimal places) using interpolation. INFORMATION (5 marks) A machine with a purchase price of R1 200 000 is estimated to eliminate manual operations by R400 000 per year. The machine is expected to have a useful life of four years. APPENDIX 1: PRESENT VALUE OF R1
Number of Periods 1 2 3 4 5 6 7 8 9 10 11 2 12 13 14 15 16 17 18 19 20 25 30 0 40 50 1% 0.9901 0.9804 0.9709 0.9706 0.9423 0.9151 0.9803 0.9612 0.9426 0.9246 0.9070 2% 3% 0.9420 0.8880 0.8375 0.7903 4% 0.8874 0.9235 0.8535 0.7894 0.7307 0.9143 0.8368 0.7664 0.7026 0.8700 0.9615 0.9524 0.9434 0.9346 0.9259 0.8444 0.8360 0.9053 0.8203 0.7441 0.6756 0.6139 0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.8195 5% 0.7419 0.6717 0.7885 0.7014 0.6246 6% 0.8277 0.6864 0.5703 0.4746 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6587 0.6355 0.6133 0.5921 0.5718 0.5523 0.5337 0.5158 0.6768 0.7142 0.6050 0.5134 7% 0.8900 0.7002 0.5874 0.4936 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7312 0.7118 0.6931 0.6750 0.8963 0.8043 0.7224 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.8734 8% 0.8573 0.4529 0.3066 0.2083 0.7462 0.7050 0.6663 0.6302 0.5963 9% 10% 0.9327 0.8706 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4817 0.4523 0.4251 0.3996 0.3759 0.7579 0.6611 0.5775 0.5051 0.4423 0.3878 0.9174 0.9091 0.8528 0.7284 0.6232 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.8417 0.8264 0.8116 0.5521 0.4120 0.3083 0.2314 0.8787 0.7730 0.6810 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2575 0.1420 0.6274 0.5820 0.5403 0.5019 0.4665 0.6080 0.3715 0.2281 0.1407 0.0872 FlexinOOKS 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3909 11% 0.5584 0.5083 0.4632 0.4224 0.3855 0.5645 0.6730 0.5537 0.4564 0.3769 0.3118 0.2584 0.2145 0.9009 0.8929 0.8850 0.8772 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2858 12% 0.6209 0.5935 0.5674 0.5428 0.5194 0.4972 0.4761 0.5346 0.5066 0.4803 13% 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.1696 0.4155 0.3503 0.2959 0.2502 0.2120 0.1799 0.1528 0.3522 0.3220 0.2946 0.0543 0.0339 0.0213 0.0134 14% 0.7972 0.7831 0.7695 0.7561 0.7432 0.7305 0.7182 0.3405 0.2992 0.2633 0.2320 0.2046 0.2176 0.1883 0.4339 0.4039 0.3762 0.3506 0.3269 0.3050 0.3606 0.3329 0.1784 0.1486 0.1240 15% 16% 17% 18% 0.4556 0.8696 0.8621 0.3505 0.3173 0.2875 0.2607 0.2366 0.2149 0.8613 0.7430 0.6419 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.2090 0.1827 0.1599 0.1401 0.1229 0.1079 0.0949 0.6575 0.6407 0.6244 0.6086 0.4323 0.4104 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1377 0.1161 0.0981 0.0829 0.3075 0.2843 0.2630 0.3538 0.1631 0.1415 0.1229 0.1069 0.1037 0.0868 0.0728 0.1456 0.1252 0.1078 0.0929 0.2697 0.2472 0.2267 0.2080 0.1911 0.1300 0.1108 0.0946 0.0808 0.8547 0.8475 0.8403 0.8333 0.8000 0.2567 0.2307 0.2076 0.1869 0.1685 0.1520 0.2292 0.2042 0.1821 0.1625 0.1452 0.1299 0.1807 0.1597 0.1413 0.1252 0.1110 0.0611 0.2848 0.1741 0.1314 0.0994 0.0754 0.0573 0.0437 0.0334 0.0256 0.0196 0.0151 0.4561 0.4371 0.4190 0.4019 0.3277 0.1954 0.1778 0.3898 0.3704 0.3521 0.3349 0.2621 19% 0.3332 0.3139 0.2959 0.2791 0.2097 0.2434 0.2255 0.2090 0.0930 0.0811 0.7062 0.6944 0.6400 0.0802 0.0693 20% 0.5934 0.5787 0.5120 0.4987 0.4823 0.4096 0.2660 0.2487 0.2326 | 25% 0.1756 0.1619 0.1476 0.1938 0.1372 0.1240 0.1122 0.1615 0.1074 0.1678 0.1346 0.0859 0.1342 0.1163 0.1042 0.0935 0.0550 0.0600 0.0520 0.0451 0.0687 0.0985 0.0876 0.0779 0.0440 0.7798 0.6095 0.4776 0.3751 0.2953 0.2330 0.1842 0.1460 0.1160 0.0923 0.0736 0.0588 0.0471 0.0378 0.0304 0.0245 0.0197 0.0160 0.0129 0.0105 0.0038 0.0835 0.0736 0.0649 0.0352 0.0708 0.0618 0.0541 0.0281 0.0703 0.0596 0.0506 0.0431 0.0367 0.0313 0.0144 0.0225 0.0691 0.0592 0.0508 0.0437 0.0376 0.0180 0.0085 0.0054 0.0035 0.0022 0.0014 0.0009 0.0006 0.0004 0.0003 0.0002 0.0001 TexiDOOK Rental 0.0514 0.0433 0.0365 0.0308 0.0261 0.0115 0.0116 0.0090 0.0070 0.0054 0.0042 0.0012 0.0972 0.0668 0.0460 0.0318 0.0221 0.0154 0.0107 0.0075 0.0053 0.0037 0.0026 0.0019 0.0013 0.0010 0.0007 0.0001
Number of Periods 1 2 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 25 30 40 50 60 1% 1.9704 1.9416 2.9410 2% 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 5.7955 3% 6.7282 2.8839 2.8266 2.7751 2.7232 5% 7.6517 7.3255 7.0197 6.7327 3.9020 3.8077 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 8.5860 8.1622 7.7861 74353 9.4713 8.9826 8.5302 4.8534 4.7135 4.5797 4.4518 4.3296 4.2124 4.1002 3.9927 1.9135 1.8861 1.8594 1.8334 1.8080 1.7833 1.7581 1.7355 1.7125 1.6901 10.3676 9.7868 9.2526 8.7605 12.1337 11.3494 106350 6% 5.6014 54172 5.2421 5.0757 4.9173 4.7665 4.6229 11.2551 10.5753 9.9540 9.3851 8.1109 7.7217 7.3601 22.0232 19.5235 9.9856 9.3936 6.2098 8.3064 7.8889 7% 8.8633 8.3838 0.9346 6.4720 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.7122 4.5638 4.4226 4.2883 4.1604 4.0386 13.0037 12.1062 11.2961 10.5631 9.8986 9.2950 13.8651 12.8493 11.9379 11.1184 10.3797 9.7122 17.2260 15.6785 14.3238 13.1339 12.0853 8.8527 18.0456 16.3514 14.8775 13.5903 124622 2.6730 2.6243 2.5771 2.5313 24869 24437 24018 23612 23216 22832 22459 2.2096 2.1743 21399 2.1065 8% 5.9713 0.9259 7.0236 7.4987 7.9427 7.1078 6.8017 6.5152 6.2469 5.9952 5.7590 5.5370 5.3282 5.1317 4.9484 4.7716 4.6065 8.3577 8.7455 5.7466 7.1390 7.5361 9% 7.9038 8.2442 10% 9.1079 8.5595 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 0.9174 0.9091 0.9009 0.8929 0.8850 0.8772 0.8696 0.8621 0.8547 0.8475 0.8403 0.8333 1.6681 1.6467 1.6257 1.6052 1.5852 1.5656 1.5465 3.2397 3.1699 3.1024 3.0373 2.9745 29137 2.8550 2.7982 27432 2.8901 26386 26386 2.5887 6.7101 6.4177 6.1446 5.8892 5.6502 5.4262 5.2161 5.0188 4.8332 4.6586 4.6586 4.4941 3.8897 3.7908 3.6959 3.6048 3.5172 3.4331 3.3522 3.2743 3.1993 3.1272 3.0576 2.9906 4.4859 4.3553 42305 4.1114 3.9975 3.8887 3.7845 3.6847 3.5892 3.4976 3.4098 3.3255 6.8052 39.1961 31.4236 25.7298 21.4822 18.2559 15.7619 13.8007 122335 44.9550 34.7609 27.6756 22.6235 18.9293 16.1614 14.0392 12.3766 elexipoOKS 5.5348 5.3349 5.1461 4.9676 4.7988 4.6389 4.4873 43436 4.2072 4.0776 3.9224 3.8115 1.5278 44506 43038 6.4951 6.2065 5.9377 5.6869 5.4527 52337 5.0286 48364 46580 3.7067 3.6046 3.9544 3.8372 4.1633 4.0310 4.3389 4.1925 4.4865 4.3271 14.7179 13.5777 125611 11.6523 10.8378 10.1059 94466 88514 8.3126 7.8237 7.3792 6.9740 6.6039 6.2651 5.9542 5.8685 5.4053 5.1624 4.9377 4.7296 7.1607 6.8137 6.4924 6.1944 5.9176 5.6603 5.4206 5.1971 4.9884 47932 4.6105 4.4392 15.5623 14.2919 13.1661 12.1657 112741 10.4773 9.7632 9.1216 8.5436 8.0216 7.5488 7.1196 6.7291 6.3729 6.0472 5.7487 5.4746 5.2223 4.9897 4.7746 7.4869 7.1034 6.7499 6.4235 6.1218 5.8424 5.5831 5.3423 5.1183 4.9095 4.7147 4.5327 16.3983 14.9920 13.7535 12.6583 11.6896 10.8276 10.0691 9.3719 8.7556 8.2014 7.7016 72497 6.8399 6.4674 6.1280 5.8178 5.5339 52732 5.0333 48122 7.7862 7.3667 6.9819 6.6282 6.3025 6.0021 5.7245 5.4675 5.2293 5.0081 4.8023 4.6106 8.0607 7.6061 7.1909 6.8109 6.4624 6.1422 5.8474 5.5755 5.3242 5.0916 4.8759 4.6755 11.1581 10.3356 9.6036 8.9501 8.3849 7.8383 7.3858 6.9380 6.5504 6.1982 5.8775 5.5845 5.3162 5.0700 4.8435 11.4699 10.5940 9.8181 9.1285 8.5136 7.9633 7.4694 7.0248 6.6231 6.2593 5.9288 5.6278 5.3527 5.1009 4.8696 17.4131 15.6221 14.0939 12.7834 11.6536 10.6748 9.8226 9.0770 8.4217 7.8431 7.3300 6.8729 6.4641 6.0971 5.7662 5.4669 5.1961 4.9476 25.8077 22.3965 19.6004 17.2920 15.3725 13.7648 12.4090 11.2578 10.2737 9.4269 8.6938 8.0552 7.4957 7.0027 6.5660 6.1772 5.8294 5.5168 5.2347 4.9789 32.8347 27.3555 23.1148 19.7928 17.1591 15.0463 13.3317 11.9246 10.7574 9.7791 8.9511 8.2438 7.6344 7.1050 6.6418 62335 5.8713 5.5482 5.2582 5.2582 4.9966 10.9617 9.9148 9.0417 8.3045 7.6752 7.1327 6.6605 62463 5.8801 5.5541 5.2623 4.9995 11.0480 9.9672 9.0736 8.3240 7.6873 7.1401 6.6651 6.2402 5.8819 5.5553 5.2630 4.9999 TEXTDOOK Kenial