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Capital Budgeting the finance department of ishka ( pty ) Ltd is faced with a choice between two machijes A , B which differ in

Capital Budgeting the finance department of ishka ( pty)Ltd is faced with a choice between two machijes A,B which differ in their production characteristics and capabllities .the current cost of capital of the company is 12% the following information regarding the two machines is available Details: cost proce, machine A : R2000000,machine B : 3000000,residual value: 220000 machine B : 320000, annual income after depreciation and income tax ,machinne A :304000, machine B 366000 required working capital ,machine A : 360000 machine B : 440000, expetedd useful life : machije A : 10 years Machine B : 10 years required apply the following methods in capital budgeting to evaluate the two mutually exclusive options available to ishka (pty) Ltd and comment on the results of each .1) net present value round off your present value interest factor to 4 decimal place as illustrated in the table below : round off the present value amount to 2 decimal place . year cashflow present value interest factor at 12% present Value year 10,8929660456.232 internal rate of return (IRR) using and 20% to interpolate ( round of your answer to 4 decimal places 3) payback period 4) accounting rate of return B) make a final recommendation to the management of ishka ( pty) Ltd based on the net present value and advice whether to invest in project A or project B.

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