Joint text on questions 8-11 Assume that you own and run your own company that manufactures a certain product. Suppose, at the end of the first business year, you start thinking about whether your company should invest in a new manufacturing machine. You must partly make certain assumptions yourself about various tasks for the intended investment (see below) in order to then be able to demonstrate your knowledge in investment assessment:

1. The basic investment amounts to SEK 5,200,000. 2. You choose the economic life yourself, but it must be somewhere in the interval 10 - 14 years. 3. Determined payment surpluses as a result of the investment are partly determined by you, but they must be the same in each year. 4. You partly decide on the financiers' return requirements yourself, but they must be somewhere in the range of 6% - 8%. 5. The residual value shall be SEK 300,000

Question 1 Based on the above information and your own assumptions, prepare an investment calculation based on the repayment method and interpret in words in as clear and pedagogical a way as possible what your calculation result provides for information in an investment assessment.

Question 2 Based on the above information and your own assumptions, prepare an investment calculation based on the present value method that provides information on whether the investment is expected to be sufficiently profitable given the company's profitability requirements. Also interpret in words in as clear and pedagogical a way as possible what your calculation result gives for information in an investment assessment.

Question 3 Explain in words how the calculation result for an investment calculation that aims to shed light on the profitability of the above financing would have been affected if the financiers' required return was 10% instead of somewhere between 6% - 8%. You do not need to calculate specific numerical values, but you need to be able to explain in words how the calculation results would be affected in principle (for example, the calculation result would be higher / lower) and in what way this change in the assumption about financiers' future return requirements could in principle will influence the assessment and decision made regarding the above investment?

Question 4 Discuss why profit planning is often considered central to a company's financial management. For a reasoning that as far as possible demonstrates your knowledge based on the course literature.