INFORMATION Use the information provided below to answer the following questions. Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after Question 5. 5.1 Calculate the Payback period of Project A (expressed in years and months). (3 marks) Hampshire Limited has the option to invest in machinery in Project A and Project B but finance is only available to invest in one of them. The initial cost of each project is R600 000. You are given the following projected data: 5.2 (5 marks) Calculate the Accounting Rate of Return on average investment) of Project B (expressed to two decimal places) PROJECT A 5.3 Calculate the Net Present Value of each project. (Round off amounts to the nearest Rand.) ( (6 marks) Annual net profit (loss): R 5.4 Based on your answers from question 5.3, which project should be chosen? Explain why. (1 marks) Year 1 20 000 Year 2 40 000 Year 3 60 000 5.5 Calculate the Internal Rate of Return of Project A (expressed to two decimal places). (5 marks) INFORMATION Year 4 80 000 Year 5 (10 000) Hampshire Limited has the option to invest in machinery in Project A and Project B but finance is only available to invest in one of them. The initial cost of each project is R600 000. You are given the following projected data: PROJECT B Annual net cash inflows: R Additional information Year 1 1. A scrap value (not included in the figures above) of R40 000 is anticipated for Project A only. 160 000 2. Year 2 Depreciation is calculated using the straight-line basis 160 000 3. The discount rate used by the company is 15%. Year 3 160 000 Year 4 160 000 Year 5 160 000