QUESTION 5 (20 Marks) Note: Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after the formula sheet. REQUIRED Use the informafion provided below to answer the following questions: 5.1 Caloulate the Payback Period of the first alternafive (expressed in years, months and days). (3 marks) 5.2 Calculate the Accounting Rate of Retum on inifal imestment of the first allemafive (expressed to two decimal places). (4 marks) 5.3 Based on the Net Present Value, which aliernafive should be chosen? Why? (Show the calculafions of the present values as wel as the net present values) (8 marks) 5.4 Caloulate the Intemal Rate of Retum (expressed to two decimal places) of the frst aliernative. Your answer must include two net present value caloulations (using consecufve rates/pertentages) and interpolation. (5 marks) INFORMATION The management of Torga Limiled is considering two imvestment qportunties. The first alternative irvolves the purchase of new machinery for R1 200000 which will enable the company to modernise its production facility. The mactinery is expected to have a useful lfe of five years and no salvage value is anficipaled. On the day Torga Limited purchases the new machinery, it would also pay fe supplier R60 000 for instalafion costs. The modernisation is eupected to incresse efficiency, resulfing in a reduction in arnus casch aperafing eupenses of R3a0 000 . The second altemative involves purchissing a truck. The fruck costs R1 200 000. Is useful life is expected io be five years and a sahage value of R300 000 is anficipated. Operating the truck will necessiate an increase of R60 000 in fhe company's working capital base immedalely upon buying the truok. The working capital cash outlow is expected to be recovered at the end of the truck's usefil fife. The truck is expected to generate R730 000 per year in addtional cash revenues. The diver's salary and other cash operafing expenses are expected to be R360 000 per year. Torga Limited desires a rate of retum of 12%. The straightine mehod of depreciafion is used. Ignore taxes