Part A Lakewood Company is considering a project that would have an eight-year life span and requires R1.6 million investment for equipment. At the end of the eight years the project would terminate, and equipment would have no salvage value. The project would provide profit each year as follows: Revenue R3,000,000 Less Variable expenses (R1,800,000) Contribution Margin R1,200,000 Less Fixed Costs: advertising, salaries and factory rental (R700,000) Less depreciation (R200,000) Profit R300,000 NB: the companys discount rate is 18% (Ignore tax)

REQUIRED: 1.1 Calculate the NPV & IRR of the proposed project

1.2 Calculate the Payback period

1.3 Calculate the Accounting return

1.4 Give four (4) reasons why Payback method is less preferred when compared to other methods.