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Note: Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5. REQUIRED Use the information given below
Note: Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5. REQUIRED Use the information given below to calculate the following: 5.1 Payback Period of both machines (expressed in years, months and days). (4 marks) 5.2 Accounting Rate of Return (on average investment) of Machine A (expressed to two decimal places). (4 marks) 5.3 Net Present Value of Machine A. (3 marks) 5.4 Net Benefit Cost Ratio of Machine B (expressed to two decimal places). (4 marks) 5.5 Internal Rate of Return of Machine B (expressed to two decimal places). Your answer must include two net present value calculations (using consecutive rates/percentages) and interpolation. (5 marks) INFORMATION Kreme Limited intends purchasing a new machine and has a choice between Machine A and Machine B. The following budgeted information is available: The company estimates that its cost of capital is 12%. Depreciation is calculated using the straight-line method. Ignore taxes. TOTAL: 100 END OF PAPER APPENDIX 1: PRESENT VALUE OF R1 APPENDIX 2 : PRESENT VALUE OF A REGULAR ANNUITY OF R1 PER PERIOD FOR N PERIODS
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