Read the information below and answer the following questions INFORMATION The management of Mastiff Enterprises has a ch
Posted: Wed Jul 06, 2022 6:00 am
Read the information below and answer the following questionsINFORMATION The management of Mastiff Enterprises has a choicebetween two projects viz. Project Cos and Project Tan, each ofwhich requires an initial investment of R2 500 000. The followinginformation is presented to you: PROJECT COS PROJECT TAN Net ProfitNet Profit Year R R 1 130 000 80 000 2 130 000 180 000 3 130 000120 000 4 130 000 220 000 5 130 000 50 000 A scrap value of R100000 is expected for Project Tan only. The required rate of returnis 15%. Depreciation is calculated using the straight-line method.Use the information provided above to calculate the following.Where applicable, use the present value tables provided inAPPENDICES 1 and 2 that appear after QUESTION 5. 5.1 Payback Periodof Project Tan (expressed in years, months and days). (3 marks) 5.2Net Present Value of Project Tan. (4 marks) 5.3 Accounting Rate ofReturn on average investment of Project Tan (expressed to twodecimal places). (4 marks) 5.4 Benefit Cost Ratio of Project Cos(expressed to three decimal places). (4 marks) 5.5 Internal Rate ofReturn of Project Cos (expressed to two decimal places) USINGINTERPOLATION. (5 marks)