Marsh Limited has investigated the possibility of investing in a new machine. The following data have been

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Marsh Limited has investigated the possibility of investing in a new machine. The following data have been extracted from the report relating to the project:

Cost of machine on 1 January Year 6: £500000.

Life: 4 years to 31 December Year 9.

Estimated scrap value: Nil.

Depreciation method: Straight-line.

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The company’s required rate of return is 15%.
Required:
Calculate the return the machine would make using the following investment appraisal methods:
1 payback;
2 accounting rate of return;
3 net present value; and 4 internal rate of return.

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