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QUESTION 5 ( 2 0 Marks ) Note: Where discount factors are required, use only the present value tables ( Appendix 1 and 2 )
QUESTION Marks Note: Where discount factors are required, use only the present value tables Appendix and that appear after the formula sheet. REQUIRED Use the information provided below to calculate the following. Ignore taxes. Payback Period of Project Ewe expressed in years, months and days marks Net Present Value of Project Ewe. Show the calculations of the present values as well as the net present values. marks Accounting Rate of Retum on average investment of Project Ewe expressed to two decimal places marks Profitability Index of Project Ram expressed to two decimal places Show the calculations of the present values. marks Internal Rate of Retum IRR of Project Ram expressed to two decimal places Your answer must include two net present value calculations using rates of return of and and the steps to calculate the IRR expressed to two decimal places. marks INFORMATION The management of Hadley Enterpriseshas a choice between two projects viz. Project Ram and Project Ewe, each of which requires an initial inuestment of A scrap value of not included in the figures below is expected for Project Ewe only. The following projected net cash flows of the two projects are presented to you: tableYearPROJECT RAM,PROJECT EWERR The expecled average annual profit of each project is R The required rate of relum is TOTAL: MARKS END OF PAPER
QUESTION
Marks
Note: Where discount factors are required, use only the present value tables Appendix and that appear after the formula sheet.
REQUIRED
Use the information provided below to calculate the following. Ignore taxes.
Payback Period of Project Ewe expressed in years, months and days
marks
Net Present Value of Project Ewe. Show the calculations of the present values as well as the net present values.
marks
Accounting Rate of Retum on average investment of Project Ewe expressed to two decimal places
marks
Profitability Index of Project Ram expressed to two decimal places Show the calculations of the present values.
marks
Internal Rate of Retum IRR of Project Ram expressed to two decimal places Your answer must include two net present value calculations using rates of return of and and the steps to calculate the IRR expressed to two decimal places.
marks
INFORMATION
The management of Hadley Enterpriseshas a choice between two projects viz. Project Ram and Project Ewe, each of which requires an initial inuestment of A scrap value of not included in the figures below is expected for Project Ewe only. The following projected net cash flows of the two projects are presented to you:
tableYearPROJECT RAM,PROJECT EWERR
The expecled average annual profit of each project is R The required rate of relum is
TOTAL: MARKS
END OF PAPER
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