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Please assist Answer the questions from the information provided. 5.1 REQUIRED Calculate the following from the information provided below: 5.1.1 Payback Period of Project Alpha
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Answer the questions from the information provided. 5.1 REQUIRED Calculate the following from the information provided below: 5.1.1 Payback Period of Project Alpha (expressed in years, months and days) (3 marks) 5.1.2 Accounting Rate of Return (on average investment) of Project Beta (expressed to two decimal places) (3 marks) 5.1.3 Net Present Value of Projact Beta (with amounts expressed to the nearest Rand) (4 marks) 5.1.4 Internal Rate of Return (expressed to two decimal placas) of Project Alpha, using interpolation. (4 marks) INFORMATION Investec Ltd has a choice between purchasing machinary for two projects viz. Project Alpha and Project Beta. Project Alpha is expected to generate a net profit of R640 000 per year for four years whilst the net profit generated by Project Beta is expected to be R150 000 (year 1), R380 000 (year 2), R1 080000 (year 3) and R1 050000 (year 4). Each project requires an investment of R5 000000 . Project Beta is expected to have a scrap value of R100 000 whilst no screp valua is anticipated for Project Alpha. The straight-ine method of depreciation is used. The cost of capital is 12%. Ignore taxes. 5.2 REQUIRED Use the information provided below to calculate the weighted average cost of capital (expressed to two decimal placas). (6 marks) INFORMATION MVP Limited approached Nadbank for a long-term loan to partly fund the purchase of expensive, specialised machinery. Nedbank is prepared to grant a loan of R400 000, at a cost of 20\%. MVP Limited uses the aftertax cost of debt and the marginal tax rate is 30%. MVP Limited also aims to sell 100000 ordinary shares at R6 each. The cost of the ordinary shares using the capital asset pricing modal is 19.90%Step by Step Solution
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