A mining company has spent R20 000 researching the prospects for a new range of products. If it were decided that production is to go ahead an investment of R240 000 in capital equipment on 1 January 2018 would be required. The accounts department has produced budgeted profit and loss statements for each of the next five years for the project. At the end of the fifth year the capital equipment will be sold, and production will cease. The capital equipment is expected to be sold for scrap on 31.12.2022 for R40 000.