Question 5 Answer the questions from the information provided. Calculate the following. Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5. Payback Period (expressed in years, months and days.) 5.1.2 Accounting Rate of Return on average investment (expressed to two decimal places) Net Present Value 5.1 5.1.1 5.1.3 5.1.4 5.2 Internal Rate of Return (expressed to two decimal places) using interpolation, if the net cash flows were R300 000 per year for five years After considering your calculations above that take the time value of money into account, should the machine be considered for purchase? Motivate your answer. (3 marks) (5 marks) (4 marks) (6 marks) (2 marks) INFORMATION Liberty Limited intends purchasing a new machine and the following details relate to this machine: Purchase price Expected useful life Scrap value Depreciation per year Minimum required rate of return Expected net profit: Year 1 Year 2 Year 3 Year 4 Year 5 APPENDIX 1: PRESENT VALUE OF R1 R1 000 000 5 years 0 R200 000 12% R 150 000 160 000 100 000 50 000 40 000 Number d Periods 1 2 3 4 5 6 7 8 9 10 11 12 13 15 16 17 18 19 20 25 30 1% 2% 0.9901 0.9604 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 09009 0.8929 0.8850 0.8772 0.8696 0.8621 0.8547 0.8475 0.8403 0.8333 0.8000 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 08116 0.7972 0.7831 0.7695 0.7561 0.7432 0.7306 0.7182 0.7062 0.6944 0.6400 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7312 07118 0.6831 0.6750 0.6575 0.6407 0.6244 0.6086 0.5934 0.5787 0.5120 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7064 0.6830 0.6587 0.6355 0.6133 0.5921 0.5718 0.5523 0.5337 0.5158 0.4987 0.4823 0.4096 0.9235 0.8535 09143 3% 0.9615 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5935 0.5674 0.5428 0.5194 0.4972 0.4761 0.4561 0.4371 0.4190 0.4019 0.3277 0.9420 0.8880 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5346 0.9327 0.8706 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4817 0.8963 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 0.8368 0.9053 0.8203 0.7441 0.8528 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.7284 0.7664 0.7026 06446 0.5919 0.5439 0.8043 0.7224 0.6496 0.5847 0.5268 0.4751 18% 19% 20% 25% 0.8360 0.7002 0.5002 0.4604 0.5066 0.4803 0.4556 0.4323 0.4104 0.3898 0.3704 0.3521 0.3521 0.3349 0.2621 0.4523 0.4251 0.3996 0.3759 0.3759 0.3538 0.3332 0.3139 0.2959 0.2959 0.2791 0.2097 0.4666 0.4339 0.4039 0.3762 0.3506 O 0.4241 0.3909 0.3606 0.3329 0.3269 03050 0.2848 0.2660 0.2487 0.2326 0.1678 0.8874 0.7885 0.7014 0.6246 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2858 02567 0.2307 0.2076 0.1869 0.1685 0.1520 0.1372 0.1240 0.1122 0.0687 0.3075 0.2843 0.2630 0.2434 0.2255 0.2090 0.1938 0.1342 0.6756 06139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3522 0.3220 0.2946 0.2697 0.2472 0.2267 0.2080 01911 0.1756 0.1615 0.1074 0.8787 0.7730 0.6810 0.6006 0.5303 0.4688 04150 0.3677 0.3262 0.2897 0.2575 0.2292 0.2042 0.1821 0.1625 0.1452 0.1299 0.1163 0.1042 0.0935 0.0550 0.8700 0.7579 06611 0.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 02320 0.2046 0.1807 0.1597 0.1413 0.1252 0.1110 0.0985 0.0876 0.0779 0.0440 0.4289 0.3875 0.3505 0.3173 0.2875 0.2607 0.2366 0.2149 0.1954 0.1778 0.1619 0.1476 0.1346 0.0859 0.8613 0.7430 06419 0.5553 0.4810 04173 0.3624 0.3152 0.2745 02394 02090 0.1827 0.1599 0.1401 0.1229 0.1079 0.0949 0.0835 0.0736 0.0649 0.0352 0.8444 0.7142 0.6060 0.5134 0.4363 0.3714 0.3166 0.2703 02311 0.1978 0.1696 0.1456 0.1252 0.1078 0.0929 0.0802 0.0693 0.0600 0.0520 0.0451 0.0225 0.6232 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 02176 0.1883 0.1631 0.1415 0.1229 0.1069 0.0930 0.0811 0.0708 0.0618 0.0541 0.0281 0.5874 0.4936 0.4155 0.3503 0.2959 0.2502 0.2120 0.1799 0.1528 0.1300 0.1108 0.0946 0.0808 0.0691 0.0592 0.0508 0.0437 0.0376 0.0180 0.8277 0.6864 0.5703 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1377 01161 0.0981 0.0829 0.0703 0.0596 0.0506 0.0431 0.0367 0.0313 0.0144 0.8195 0.6730 0.5537 0.4564 0.3769 0.3118 0.2584 0.2145 0.1784 0.1486 0.1240 0.1037 0.0868 0.0728 00611 0.0514 0.0433 0.0365 0.0308 0.0261 0.0115 0.7798 0.6095 0.4776 0.3751 0.2953 0.2330 0.1842 0.1460 0.1160 0.0923 0.0736 0.0688 0.0471 0.0378 0.0304 0.0245 0.0197 0.0160 0.0129 0.0105 0.0038 0.7419 0.5521 0.4120 0.3083 0.2314 0.1741 0.1314 0.0994 0.0754 0.0573 0.0437 0.0334 0.00256 0.0196 0.0151 0.0116 0.0090 0.0070 0.0054 0.0042 0.0012 X W 09:07 2022/08/11 20 25 30 40 50 60 Number d Periods 1 2 3 4 5 6 7 8 9 10 11 0.8195 0.6730 0.5537 0.4564 0.7798 0.6095 0.4776 0.3751 0.2953 0.2330 0.1842 0.1460 0.1160 0.7419 0.5521 04120 0.3083 0.2314 0.1741 0.5504 0.3048 0.1697 0.0951 0.0535 0.0303 1% 0.6717 0.4529 0.3066 0.2083 0.1420 0.0972 0.0668 0.0460 0.0318 0.0221 0.9901 0.6080 0.3715 0.2281 0.1407 0.0872 0.0543 0.0339 0.0213 0.0134 0.0085 3.9020 2.9410 2.8839 4.8534 6.7282 7.6517 2% 8.5660 09804 x 3.8077 3% 1.9704 1.9416 1.9135 1.8861 1.8594 1.8334 0.3769 0.3118 0.9709 0.9615 2.8286 7.3255 3.7171 5.7955 5.6014 5.4172 5.2421 6.4720 6.2303 4% 4.7135 4.5797 4.4518 8.1622 7.7861 9.4713 8.9826 8.5302 10.3676 9.7868 9.2526 27751 3.6299 0.2584 02145 0.1784 0.1486 APPENDIX 2: PRESENT VALUE OF A REGULAR ANNUITY OF R1 PER PERIOD FOR N PERIODS 5% 6.0021 0.1314 0.0994 0.0754 0.0573 0.0173 0.0099 0.0057 0.0033 6% 7.0197 6.7327 6.4632 0.9624 0.9434 0.9346 0.9259 0.9174 3.5460 3.4651 3.3872 5.0757 4.9173 4.3295 42124 4.1002 5.7864 5.5824 7% 2.7232 2.6730 2.6243 25771 2.5313 6.2098 8% 3 0.0923 4.7665 www 3.9927 3.3121 3.2397 5.3893 5.2064 7.4353 7.1078 6.8017 6.5152 6.2469 9% 5.9713 5.7466 8.1109 7.7217 7.3601 7.0236 6.7101 8.7605 8.3064 7.8869 7.4987 7.1390 0.1240 0.1037 0.0868 0.0728 0.0736 0.0154 0.0054 1.8080 1.7833 1.7591 1.7355 1.7125 1.6901 1.6681 1.6467 0.0437 0.0334 0.0256 0.0196 0.0151 0.0116 0.0090 0.0070 0.0054 0.0042 0.0012 0.0588 0.0471 0.0378 0.0304 0.0245 0.0197 0.0160 0.0129 0.0105 0.0038 10% 0.0611 0.0514 0.0433 0.0365 0.0107 0.0075 0.0053 0.0037 0.0026 0.0019 0.0035 0.0022 0.0014 0.0009 0.0006 0.0004 0.0019 0.0011 0.0007 0.0004 0.0002 0.0001 0.0001 0.9091 0.9009 0.8929 0.8850 11% 12% 13% 14% 15% 16% 17% 2.4869 2.4437 2.4018 2.3612 2.3216 3.1699 3.1024 3.0373 2.9745 2.9137 3.8897 3.7908 3.6959 3.6048 3.5172 3.4331 46229 4.4859 4.3553 4.2305 4.1114 3.9975 3.8887 3.7845 5.9952 5.7590 5.5370 5.3282 6.8052 6.4951 6.2065 5.9377 2.8550 2.7982 0.8772 0.8696 0.8621 0.8547 0.8475 0.8403 0.8333 3.3522 3.2743 5.0330 4.8684 4.7122 4.5638 4.4226 4.2883 4,1604 0.0013 0.0010 0.0007 0.0001 0.0003 . 5.5348 5.3349 5.1461 4.9676 4.7988 4.6389 4.4873 4.3436 0.0308 0.0261 0.0115 4.0386 1.6257 1.6052 1.5852 1.5656 1.5465 1.5278 2.2832 2.2459 2.2096 2.1743 2.1399 2.1065 0.0002 0.0001 5.6869 5.4527 5.2337 5.0286 18% . 19% 20% 3.6847 3.5892 3.4976 3.4098 3.3255 6.4177 6.1446 5.8892 5.6502 5.4262 5.2161 5.0188 4.8332 4.6586 2.7432 2.6901 2.6386 2.5887 3.1993 3.1272 3.0576 2.9906 4.8364 3.9224 3.8115 3.7067 4.2072 4.0776 3.9544 3.8372 5.1317 4.9464 4.7716 4.6065 4.4506 4.3038 4.1633 4.0310 3.6046 4.4941 4.3389 4.1925 4.6560 4.4865 4.3271 6 7 B 9 10 11 12 14 15 16 17 18 19 20 25 30 13 12.1337 11.3484 10.6350 9.9856 9.3936 8.8527 40 50 60 5.7955 5.6014 5.4172 5.2421 5.0757 4.9173 4.7665 1 6.7282 6.4720 6.2303 6.0021 5.7864 5.5824 5.3893 7.6517 7.3255 7.0197 6.7327 6.4632 6.2098 5.9713 8.5660 8.1622 7.7861 7.4353 9.4713 8.9826 8.5302 8.1109 7.7217 7:3601 10.3676 9.7868 9.2526 8.7605 8.3064 11.2551 10.5753 9.9540 9.3851 13.0037 12.1062 11.2961 10.5631 9.8986 9.2950 7.1078 6.8017 6.5152 6.2469 5.9952 7.8869 7.4987 17.2260 15.6785 14.3238 13.1339 12.0853 22.0232 19.5235 7.0236 39.1961 31.4236 8.8633 8.3838 7.9427 7.5361 X 46229 4.4859 17.4131 15.6221 14.0939 14.7179 13.5777 12.5611 11.6523 10.8378 10.1059 9.4466 8.8514 18.0456 16.3514 14.8775 13.5903 12.4622 11.4699 10.5940 25.7298 5.2064 5.0330 4.8684 5.7466 15.5623 14.2919 13.1661 12.1657 11.2741 10.4773 9.7632 9.1216 16.3983 14.9920 13.7535 12.6593 11.6896 10.8276 10.0591 9.3719 6.7101 6.4177 7.1390 6.8052 8.3577 7.9038 8.7455 8.2442 11.1581 10.3356 9.6036 W 5.5348 5.3349 4.3553 44.9550 34.7609 27.6756 22.6235 18.9293 16.1614 14.0392 12.3766 5.7590 6.1446 6.4951 8.7556 4.2305 4.1114 3.9975 8.9501 9.8181 9.1285 4.7122 5.1461 5.8892 13.8651 12.8493 11.9379 11.1184 10.3797 9.7122 9.1079 8.5596 8.0607 7.6061 7.1909 6.8109 6.4624 6.1422 5.8474 5.5755 5.5370 5.3282 4.5638 4.4226 4.2883 4.1604 4.0386 3.9224 3.8115 3.7067 3.6046 4.9676 7.4869 7.1034 6.7499 6.4235 5.6502 7.1607 6.8137 6.4924 6.1944 5.9176 5.6603 8.3126 7.8237 7.3792 6.9740 6.2065 5.9377 5.6869 5.4527 4.7988 4.6389 4.4873 4.3436 42072 4.0776 3.9544 5.1317 4.9464 21.4822 18.2559 15.7619 13.8007 12.2335 10.9617 9.9148 9.0417 3.8887 3.7845 3.6847 3.5892 3.4976 3.4098 3.3255 5.4262 5.2161 7.7862 7.3667 6.9819 6.6282 6.3025 6.0021 5.7245 5.4675 25.8077 22.3965 19.6004 17.2920 15.3725 13.7648 12.4090 112578 10.2737 9.4269 8.6938 8.0552 7.4967 32.8347 27.3555 23.1148 19.7928 17.1591 15.0463 13.3317 11.9246 10.7574 9.7791 8.9511 8.2438 7.6344 12.7834 11.6536 106748 9.8226 9:0770 8.4217 7.8431 7.3300 6.6039 6.2651 8.5436 8.0216 7.5488 7.1196 6.7291 6.3729 6.0472 8.3045 6.1218 5.8424 5.5831 5.3423 11.0480 9.9672 9.0736 8.3240 4.7716 4.6065 4.4506 4.3038 5.0188 4830 4.6586 4.4941 5.2337 5.0286 8.3649 7.8393 7.3658 6.9380 6.5504 6.1982 7.6873 5.4206 5.1971 4.9884 4.7932 4.6105 4.4392 5.9542 5.6685 5.4053 5.7487 4.1633 4.0310 4.3389 7.6752 7.1327 6.6605 4.8364 4.6560 4.4865 4.3271 5.1183 4.9095 4.7147 5.3242 8.2014 7.7016 72497 6.8399 6.4674 6.1280 5.8178 5.5339 5.2732 5.0333 4.8122 7.1401 6.6651 3.8372 8.5136 7.9633 7.4694 7.0248 6.6231 6.2593 5.9288 5.6278 5.3527 5.1009 4.8696 5.2293 5.0081 4.8023 4.6106 4.1925 5.0916 4.8759 4.6755 4.5327 5.1624 4.9377 4.7296 6.8729 6.4641 6.0971 5.7662 5.4669 5.1961 5.4746 5.2223 4.9897 4.7746 7.1050 6.6418 6.2335 5.8713 5.5482 5.2582 5.8775 5.5845 5.3162 5.0700 4.8435 7.0027 6.5660 6.1772 5.8294 5.5168 5.2347 4.9789 6.2402 5.8819 5.5553 5.2630 4.9476 4.9966 6.2463 5.8801 5.5541 5.2623 4.9996 4.9999