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Algebra Limited has the intention to purchase a new machine and has a choice between the following two machines: The company estimates that its cost
Algebra Limited has the intention to purchase a new machine and has a choice between the following two machines: The company estimates that its cost of capital is 6%. Required: (a) Calculate the payback period for both machines. (answers must be expressed in years, months and days) (4 marks) (b)Calctlate the discounted payback period for both machines (answers in years, months and days)( 6 marks) (c) Calculate the net present value for both machines. (to the nearest Rupee) (8marks) (d) Calculate the Profitability Index for Machine Bosch. (3 marks) (e) Calculate the Internal Rate of Return for both machines (Use interpolation to arrive at your final answer.) (6 marks)
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