FMA 400 FINANCIAL MANAGEMENT IV Additional information The net present value NPV and internal rate of return (IRR) for Machine Pare R98 510 and 17% respectively Required: Show all calculations and round answers off to the closest whole number, 5.1. Using the information provided, apply the net present value (NPV) technique to calculate the NPV and IRR for Machine Q. Use an alternative cost of capital of 18% for purposes of determining the IRR 126) 5.2. Which machine will Progress's management consider buying? Give reasons for your answer. Question 6 (24) A friend of yours told you that he had listened to a radio discussion on finance and investment. During the discussion frequent references were made to the capital structure of organisations as well as to the cost of capital and different types of risk. He said that he did not know what any of these concepts mean. Explain to your friend what is meant by the following: 6.1.1. Capital structure of a business 6.1.2. Business risk 6.1.3. Financial risk 6.2. Simon Dube, the financial manager of Speedway Distributors (Pty) Ltd, has to make a recommendation to the executive management committee of the company about the viability of a new proposed project. Simon has calculated that the return on the proposed project is 15.50%. He needs to calculate the weighted average cost of capital in order to decide whether the project is viable or not and has the following information available to do SO: Cost Source Long-term debt 8.00% Book value 1 500 000 800 000 2 500 000 Preference shares 9.50% 11.00% Ordinary shares Required: Use the costs of capital available to Simon to calculate the weighted average cost of capital (WACC) for the proposed project. (13) Show all your calculations and round off your answers to two decimals. TOTAL: 150 Page 10 of Assignment SBS