Fast Motors have just made an investment of R$390000$ in a state of the art chassis straightening device, this is for taxis that have been damaged in motor accidents. Details of the machine are below:

$$ Expected useful life $5$ years $($straight line depreciation$)$

$$ Salvage value $10000($sold as scrap metal$)$

$$ Cost of capital $10\%$

$$ The tax rate is $30\%$

$$ Expected cash flows are as follows:

Year

$180000$

$2120000$

$3100000$

$4110000$

$590000$

Required

$1\mathrm{.}1$ Calculate the Payback Period. $(4)$

$1\mathrm{.}2$ Determine the Average Rate of Return $($ARR$)?(5)$

$1\mathrm{.}3$ Fast Motors requires a payback period of no more than $4$ years and a return of at least $25\%.$ On the basis of these criteria, should this project be accepted? Explain your answer. $(2)$

$1\mathrm{.}4$ Calculate the NPV for the project. Should the project be accepted on this basis? Explain your answer. $(7)$

$1\mathrm{.}5$ To make your ultimate decision, which method will you choose? Why? $(2)$

$1\mathrm{.}6$ Explain the advantages and disadvantages of the NPV method. $(5)$