Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

5 (20 Marks) Note: Where applicable, refer to the present value tables (APPENDIX 1 and 2) that appear after QUESTION 5. REQUIRED Study the information

5 (20 Marks) Note: Where applicable, refer to the present value tables (APPENDIX 1 and 2) that appear after QUESTION 5. REQUIRED Study the information given below and answer the following questions: | 5.1 Calculate the Payback Period of both projects. (Answers must be expressed in years, months and days.) (4 marks) 529 5.2 Calculate the Net Present Value project of both projects. (Round off amounts to the nearest Rand.) (6 marks) 5.3 5.4 Taking into account the time value of money, which project should be chosen? Why? Calculate the Accounting Rate of Return (on average investment) of Project A (answer expressed to two decimal places). (1 mark) (4 marks) 5.5 Calculate the Internal Rate of Return (IRR) of Project B (answer expressed to two decimal places). (5 marks) INFORMATION Details of the initial investments, net cash inflows and net profit of two projects are presented below: Net cash flows Net profit Year Project A R Project B R Project A Project B R R 0 (500 000) (500 000) 1 130 000 170 000 5 000 45 000 2 180 000 170 000 55 000 45 000 3 250 000 170 000 125 000 45 000 4 125 000 170 000 0 45 000 The required rate of return is 12%. No scrap values are expected for the projects

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cima Official Learning System Fundamentals Of Business Mathematics

Authors: Graham Eaton

4th Edition

1856177831, 978-1856177832

More Books

Students also viewed these Accounting questions

Question

7. What decisions would you make as the city manager?

Answered: 1 week ago

Question

8. How would you explain your decisions to the city council?

Answered: 1 week ago