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 inAPPENDICES 1 and 2 that appear after QUESTION 5. 5.1 5.1.1Calculate the Payback Period of Project A (expressed in years,months and days). (3 marks) Calculate the Accounting Rate of Return(on average investment) of Project B (expressed to two decimalplaces). 5.1.2 (5 marks) 5.1.3 Calculate the Net Present Value ofeach project (with amounts rounded off to the nearest Rand). (6marks) Use your answers from question 5.1.3 to recommend theproject that should be chosen. Motivate your choice. 5.1.4 (1marks) INFORMATION Zeda Enterprises has the option to invest inmachinery in projects A and B but finance is only available toinvest in one of them. You are given the following projected data:Project A Project B Initial cost R300 000 R300 000 Scrap value R40000 0 Depreciation per year R52 000 R60 000 Net profit Year 1 R20000 Year 2 R30 000 Year 3 R50 000 Year 4 R60 000 Year 5 R10 000 Netcash flows Year 1 R90 000 Year 2 R90 000 Year 3 R90 000 Year 4 R90000 Year 5 R90 000 Additional information The discount rate used bythe company is 12%. APPENDIX 1: PRESENT VALUE OF R1 Use theinformation provided below to calculate the Internal Rate of Return(expressed to two decimal places) using interpolation. (5 marks)INFORMATION A machine with a purchase price of R1 200 000 isestimated to eliminate manual operations by R400 000 per year. Themachine is expected to have a useful life of four years. 5.2