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QUESTION 3 ( 2 0 Marks ) Note: Where applicable, use the present value tables that appear in the nodule guide. REQUIRED Stuct the information

QUESTION 3
(20 Marks)
Note: Where applicable, use the present value tables that appear in the nodule guide.
REQUIRED
Stuct the information provided below and calculate the following:
3.1 Payback Period of bath projects (expressed in years, nonths and days).
(6mirs)
3.2 Accounting Rate of Retum (on average invesiment) of Project B (oxpressed to tho decinal places).
(4 marks)
3.3 Nel Present Value of boh projects. The answer must show the present values for each year followed by the caloulaton of the nel pesent value.
(6 marks)
3.4 Internal Rate of Retum of Projed 8(oxpressed to two decinal placos). The answer must include the calculation of two net present valus (ising consecuive rales(percentages) and interpolation.
(4 marks)
INFORMATION
You are required to do an analysis of two proposed capit /hvesiment propects. Detals of initial investments, scrap values and net cash flows are presented belor. The company ises a discount rale of 15% when evaluating projects.
\table[[,Project A,Project B],[Initial investment,R600000,R600000],[Scrap value (not induded in the figures below),R20000,0],[Net cash flows:],[Year 1,R310000,R220000],[Year 2,R220000,R220000],[Year 3,R190000,R220000],[Year 4,R180000,R220000]]
Note:
The profit per year for Project B was R70000.
TOTAL: 60 MARKS
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