QUESTION 2 Machine A Machine B Initial cost R100 000 R110 000 5 years 5 years R10 000 0 Expected economic life Expected disposal/residual value Expected net cash inflows End of: Year 1 Year 2 R R 33 000 34000 27 000 33 000 Year 3 Year 4 32 000 30 000 26000 18 000 33 000 33 000 33 000 22 000 Year 5 Depreciation per year The company estimates that its cost of capital is 14%. 2.1 Calculate the payback period for Machine A and B (answers must be expressed in years, months and days) (5 marks) 2.2 (4 marks) Calculate the accounting rate of return on average investment) for Machine A. (answer rounded off to 2 decimal places). 2.3 Calculate the net present value of each machine (round off amounts to the nearest Rand). (6 marks) 2.4 Calculate the internal rate of return for Machine B