hanex limited is considering investing $50,000/- in a new machine with an expected life life of 5 years. the machine will have no scrap value at the end of five years.it is expected that 2000 units will be sold each year at a selling price of $3.00 per unit, variables production cots are expected to be $1.65 per unit, while incremental fixed cost, mainly the wages of maintenance engineer are expected to be $10.000/- per year. Hanex limited uses a discount rate of 12% for investment appraisal purposes and expects investment projects to recover their initial investment within two years.

required

a. calculate and comment on the payback period of the project

b. calculate and comment on the net present value of the project

c. identify the limitations of the net present value techniques when applied generally to investment appraisal

d. explain why risk an uncertainty should be considered in the investment appraisal