Gamma Solutions Details:

• Initial amount invested is R700,000 and expected residual value is R70,000.
• Cashflows and discount factors:

Year	Cashflows	Discount Factor
Year 1	R120,000	0.909
Year 2	R180,000	0.826
Year 3	R160,000	0.751
Year 4	R110,000	0.683
Year 5	R90,000	0.621

• Cost of capital: 10%
• Depreciation: R50,000 per year
• Tax rate: 28%

Required:

1. Calculate each of the following: 1.1 Accounting Rate of Return 1.2 Payback period 1.3 Net Present Value (NPV) 1.4 Profitability Index (PI)