Question 4 [32] Pride Ltd needs to replace one of its meal machines (the Hyena) as a result of a drastic decline in production numbers in recent years. The CEO, Mr Simba, thinks that the machine has gone past its useful life and, therefore, he expects maintenance costs to increase yearly. Ms Nala, the production manager, identified two possible replacement options for management to consider. Management communicated to Nala that they are not planning on expanding the production unit as yet and, as a result, only one new meal machine is needed. Nala, together with the financial manager (Zazu), prepared the table of relevant cash flows for each of the alternatives below. Zazu calculated the company's cost of capital to be 13%. Meal Machine A will require an initial investment of R610 000 and Meal Machine B will require R940 000. Required: Apply the net present value (NPV) capital budgeting technique to decide and recommend which one of the two meal machines Pride Ltd should consider as the replacement and explain to management why they should choose this option. Zazu, the financial manager of Pride Ltd, has to make a recommendation to the executive management committee of the company about the viability of a new proposed project - A Bug's Life Cuisine. Timon has calculated that the return on the proposed project is 18.50%. He needs to calculate the weighted average cost of capital in order to decide whether the project is viable or not and has the following information available to do so: Required: Show all your calculations and round off your answers to two decimals. 5.1 Use the costs of capital available to Timon to calculate the weighted average cost of capital (WACC) for the A Bug's Life Cuisine project. 5.2 Advise Timon on his recommendation to Zazu and the executive management committee whether or not they should invest in A Bug's Life Cuisine. Mr Pumba (Head of Recruitment) was very pleased with your interview and you wer appointed immediately. Your first task is as follows: Pride Ltd is exploring the idea to expand their business into the water leisure industry. Pride identified an opportunity to invest in a new water park, The Water Hole, and did a feasibility study as part of their research on the industry and the SWOT analysis applicable to this water park. Pride's management is considering this new opportunity and requested your assistance to complete the business case analysis and arrive at a decision. The following information is available for this purpose: Additional information: - The investment cost required to develop the software is R3900000. - The company's required return on investment is 11%. - The net present value at 11% is R2690900. - It is recommended that you also use an alternative required return rate of 13% for your analysis. Required: Show all formulas and calculations. 2.1 Use the information provided to calculate the internal rate of return (IRR) for this investment. 2.2 Recommend to Pride's management whether they should invest in The Water hole. Provide reasons for your recommendation