QUESTION 2 Machine A Machine B R100 000 Initial cost R110 000 5 years 5 years 0 R10 000 Expected economic life Expected
Posted: Tue Apr 26, 2022 9:45 am
- Question 2 Machine A Machine B R100 000 Initial Cost R110 000 5 Years 5 Years 0 R10 000 Expected Economic Life Expected 1 (451.06 KiB) Viewed 46 times
QUESTION 2 Machine A Machine B R100 000 Initial cost R110 000 5 years 5 years 0 R10 000 Expected economic life Expected disposal/residual value Expected net cash inflows R R 33 000 34 000 End of: Year 1 27 000 33 000 Year 2 32 000 33 000 Year 3 30 000 33 000 Year 4 26 000 33 000 Year 5 18 000 22 000 Depreciation per year The company estimates that its cost of capital is 14%. (5 marks) 2.1 Calculate the payback period for Machine A and B (answers must be expressed in years, months and days) (4 marks) 2.2 Calculate the accounting rate of return (on average investment) for Machine A. (answer rounded off to 2 decimal places).