5.2 Net Present Value of Project Tan

INFORMATION The management of Mastiff Enterprises has a choice between two projects viz. Project Cos and Project Tan, each of which requires an initial investment of R2 500 000. The following information is presented to you: Year 2 3 5 PROJECT COS Net Profit R 130 000 130 000 130 000 130 000 130 000 PROJECT TAN Net Profit R 80 000 180 000 120 000 220 000 50 000 A scrap value of R100 000 is expected for Project Tan only. The required rate of return is 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 in APPENDICES 1 and 2 that appear after QUESTION 5. . APPENDIX 2: PRESENT VALUE OF A REGULAR ANNUITY OF R1 PER PERIOD FOR N PERIODS . 095040304070001703060007603010001107000400000 4604375 62281 0167 0672 054 0000 00213 031340540004 HAREDE CARA MEMA DODAZ0P HD PILDING PIGES GE 000000000000000000 5063005537 064 030 638 024 021 01704040170068 0721460 WIEDER 604.705874 04064150303 4260 425 421200570015250130001000010 0207340220130633 6294255 621 101 1415 01290106904 SOLD 044 067505 04 05000000443507632025 2026 2027 DIVERSES TS VOES E OS C ELS G GMO 07604 083 410 04173 034 4352 0276 4240200705002500000 m 7575775 050 0443 0345 422020022002070 e 100003404156 03677 032 027 4255 42 26522300 14570140044637135 036 025 0247 02307 2006 207 Neo Peo co oo out it as o ko its taro wcs I wo co so at t A 25% 11 s: : : : : to seo tot we sta in s t ed Statt 3 5 654363 470000500055 05 150 254 12 4 es n 8 7 OF M 30 to it co Ftte to wt it up wi mo co ot at go on t ct as t LESED PESHESHED ONE O 25 M V * 20 " 2 st 8 1575 05542400 SD ATT GE D 14 D st ze wdo o me as it is o studio et to s P E AS FOLL CON ACCESSO 4 11 IN a . . 7 $ 5 3 z 1 P Peint Hunte SEYCS DE CONC S wis at unios ta umn rsu ms oz Luiz SONY DSL MORY HOUSES BUS RESOUTH IN SONY BROD PET SH SCHENNY HELYLE HOUS M 3 0 3 DVD IND WALL A SOUTH o am it on ste - s i d BOY GUY SAL MY L LO 19 TWIESNES PENDE L 6 WYBOSTE CH " UNITAT GET IT OST TT AT START T GOLTTOUT MEET TEEDE GEST LIST 00t at ut ut at NT NT E-SHO 9 $ 9 M NO 9 BY 535 M LYWY W GO ALY CUYAS DE CIPELE 2 N 2 M 9 A > 2 9 M 8 > 8 R 9 N 6 # D " a 34 # ** L S 1 ( t 1 PH