n addition to the above, the following information is available: All sales and purchases of inventory are on credit. Inventories on 31 December 2020 amounted to R1 500 000. Credit terms of 5/10 net 90 days are granted by creditors. Credit terms of 60 days are granted to debtors. Dividends declared for the years ended 31 December 2021 and 2022 amounted to R1 169 280 and R1 422 000 respectively

. The financial manager of Orbit Limited provided the following forecasts for 2023: Sales are estimated at 8 000 units with a selling price of R1 800 each. The manufacturing costs include direct materials of R460 per unit, direct labour of R315 per unit, variable overheads of R170 per unit and fixed overheads of R880 000. Fixed selling and administration costs are estimated at R2 000 000 and the variable selling costs are estimated to be 7.5% of sales. The directors are contemplating diversification in 2024 by entering the passenger transport market. This could be achieved through the purchase of a fleet of midi buses that are expected to cost R9 500 000. An additional R500 000 will be spent on import duties. The cost of operating the buses each year is expected to be R4 100 000 and the annual revenues from transporting the passengers are estimated at R7 000 000. The buses are expected to have a total salvage value of R1 000 000 and the estimated useful life of the buses is five years. The companys cost of capital is expected to reduce to 15%. Depreciation is calculated using the straight-line method.

Refer to the planned diversification for 2024 and calculate the following:

4.1 Payback Period (expressed in years, months and days)

4.2 Accounting Rate of Return on initial investment (expressed to two decimal places)

4.3 Net Present Value )

4.4 Internal Rate of Return using interpolation (expressed to two decimal places).

4.5 Internal Rate of Return using interpolation (expressed to two decimal places) if there were no import duties and no salvage value.