During $2022$ the management of Capri Limited considered the acquisition a new machine for purchase and installation during the second quarter of $2024$ with a desired rate of return of $15\%.$ The machine will cost R$6000000$ excluding import duties of R$250000$ and will have a useful life of five years. The machine is expected to increase cash inflows by R$2000000$ per year but cash expenses will increase by R$300000$ per year.

Refer to the proposed acquisition of a new machine for purchase and installation during the second quarter of $2024$ and answer the following questions:

Calculate the Payback Period $($expressed in years, months and days$)$

Calculate the Accounting Rate of Return on initial investment $($expressed to two decimal places$).$

Calculate the Internal Rate of Return $($expressed to two decimal places$).$ Your answer must include two net present value calculations $($using consecutive rates$/$percentages$)$ and interpolation.

Calculate the Net Present Value if the machine is expected to have a scrap value of R$300000.$

Suppose Capri Ltd funds the purchase of the new machine through the issue of $12\%$ preference shares that are expected to sell for R$10$ each. If the floatation costs are estimated at R$1$ per share, calculate the cost of the preference shares $($expressed to two decimal places$).$

Suppose Capri Ltd funds the purchase of the new machine through the issue of ordinary shares. Assume that the present value of an ordinary share of Capri Ltd is R$17\mathrm{.}25,$ the next projected dividend is R$1\mathrm{.}80$ per share and the expected growth rate in dividends is $15\%$ p$.$a$.$ Use the Gordon Growth Model to estimate the cost of the ordinary shares $($expressed to two decimal places$).$In addition to the above, the following information is available:

Interim dividends paid in $2022$ amounted to R$456000.511800$ shares were in issue during $2022.$ The

market price per share was R$17\mathrm{.}25$ on $31$ December $2022.$

During $2022$ the management of Capri Limited considered the acquisition a new machine for purchase and

installation during the second quarter of $2024$ with a desired rate of return of $15\%.$ The machine will cost

R$6000000$ excluding import duties of R$250000$ and will have a useful life of five years. The machine is

expected to increase cash inflows by R$2000000$ per year but cash expenses will increase by R$300000$ per

year. Depreciation is calculated using the straight$-$line method.

At the end of December $2022$ the company was approached by a group of previously disadvantaged women

who had opened a service station on $01$ July $2022,$ selling only diesel. They needed assistance in improving

the financial performance of the service station. Diesel was sold at R$16$ per litre and the variable costs totalled

R$14$ per litre. The fixed costs were R$135000$ per month. After six months of opening, the sales achieved was

$540000$ litres and the sales were almost the same each month. To improve the performance, the Capri

Limited considered the following proposals: