QUESTION 4 (25 marks) Whisk Ltd. intends to buy a new machine for production. Machine A...

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QUESTION 4 (25 marks) Whisk Ltd. intends to buy a new machine for production. Machine A costs 20,000 and has a scrap value of 2,000. The company uses a 9% discount rate. Net operating cashflows for Machine B. 4a) 4b) Year 1 Year 2 Year 3 TE 9,000 8,000 5,000 Why is it important to appraise capital investments? (2 marks) For Machine A calculate: 1. The Accounting Rate of Return (ARR) II. The Net Present Value (14 marks) 4c) Discuss the pros and cons of the Net Present Value. (5 marks) 4d) Discuss in detail two qualitative factors that should be considered when purchasing a machine (4 marks) QUESTION 4 (25 marks) Whisk Ltd. intends to buy a new machine for production. Machine A costs 20,000 and has a scrap value of 2,000. The company uses a 9% discount rate. Net operating cashflows for Machine B. 4a) 4b) Year 1 Year 2 Year 3 TE 9,000 8,000 5,000 Why is it important to appraise capital investments? (2 marks) For Machine A calculate: 1. The Accounting Rate of Return (ARR) II. The Net Present Value (14 marks) 4c) Discuss the pros and cons of the Net Present Value. (5 marks) 4d) Discuss in detail two qualitative factors that should be considered when purchasing a machine (4 marks)