Malaise Ltd produces and sells bags in the state of Victoria, Australia. Guillermo, the manager of Malaise Ltd, estimates that if it invests $250,000 in a machine it can save $80,000 in annual cash operating costs. The new machine has an expected useful life of 3 years with $10,000 terminal value, and it is assumed that Malaise Ltd will use the straight-line method for depreciation of the new machine. The required rate of return is 8%. GST issues are to be ignored and all cash flows are assumed to occur at year end with the exception of the initial investment amounts.

Required: (showing all workings

For each of the three methods of comparison set out below: analyse the investment plan of Malaise Ltd and comment on whether or not to accept the investment:

(a) Net Present Value (NPV)	(7 marks)
(b) Payback Period	(5 marks)
(c) Accrual Accounting Rate of Return	(8 marks)

PRESENT VALUE TABLES Period 1% 2% 3% 14% Present Value of an ordinary annuity of $1 5% 6% 1952 0.943 7% 8% 9% 10% 1 0990 0.900 0.971 0962 0935 0.909 0.917 1.759 2 1.970 1.913 1.886 1.259 - 1.606 1.736 3 2.829 2.775 2531 1.627 2.673 E 465 7.941 3902 4053 2804 3.800 2.487 0.926 1.783 2577 - 2312 3.993 2723 SAD 4 2.717 3.267 3.240 3.620 4452 5 4713 4329 100 3.890 6 3.170 3.791 A355 S.601 4560 5.417 6220 5.242 15.076 4212 4912 - 5.582 5.795 6726 4623 4486 4767 - 5.389 7 6.002 16786 3.033 5.472 7.325 4868 5.235 0 6733 6.463 S.sas 7652 asco 7.020 7.786 a sac 6210 6.B02 9 S.206 5747 16247 6710 1.435 5.971 6515 7.024 17.100 5.995 15418 8.759 6.145 10 9.471 2.982 2 111 7.722 1260 Present Value table of $1 Period 1% 20% 1295 39 594 7% 1994 926 10% 1 0990 2.990.90 0.971 1962 0.952 0.943 925 0.926 0917 7.909 2 1961 2.960 961 0.943 925 0.907 0.890 2.872 0857 1.842 0.826 Lehetett 3 0971 0.942 0.915 2.889.864 0.840 2816 0.794 0772 0.751 4 0.961 2.924 0.888 DBSS 1.823 0.792 2.762 0.735 0.706 0.682 S 2.951 0719 0.906 0.862 822 0.784 0.747 1713 0.681 2650 0,621 1942 BBB 0.827 790 0.746 0.705 2666 0.60 0.56 0.564 See less than three 7 2.932 871 0.812 2.760 0711 0.665 2.623 582 547 asia 8 frasa 721 tante trees 1922 esa 0.789 0.791 0.677 0.627 as 2 0540 502 0.467 9 9 0914 0.837 0766 703 2.645 0.592 2544 0.500 0.460 0424 10 0.906 0.820 0.744 2,676 0.614 0.558 Soe 0.463 0.422 0.386 6