Note: Where discount factors are required use only the $4$ decimals present value tables that appear in the module guide.

$5\mathrm{.}1$

REQUIRED

Use the information provided below to calculate the following:

$5\mathrm{.}1\mathrm{.}1$

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

$(3$ marks$)$

$5\mathrm{.}1\mathrm{.}2$

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

$(4$ marks$)$

$5\mathrm{.}1\mathrm{.}3$

Internal Rate of Return $($expressed to two decimal places$).$ Your answer must include two NPV calculations $($using consecutive rates$/$percentages$)$ and interpolation.

$(6$ marks$)$

INFORMATION

Gillette Manufacturers intends investing in a machine. The following details relate to this machine:

Purchase price

R$800000$

Expected useful life

$4$ years

Scrap value

R$40000$

Minimum required rate of return

$15\%$

Expected net profit:

$1$st year

R$60000$

$2$nd year

R$80000$

$3$rd year

R$110000$

$4$th year

R$120000$ WITH REFERENCE