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QUESTION 5 (20 MARKS) Use the information given below to answer the following questions. Where applicable, use the present value tables provided in APPENDICES 1

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QUESTION 5 (20 MARKS) Use the information given below to answer the following questions. Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5 (bottom of the question paper). 5.1 Calculate the Payback Period of Machine A (expressed in years, months and days). (3 marks) 5.2 Calculate the Accounting Rate of Return (on average investment) of Machine A (expressed to two decimal places). (4 marks) 5.3 Calculate the Net Present Value of Machine A. (3 marks) 5.4 Calculate the Benefit Cost Ratio of Machine B (expressed to two decimal places). (4 marks) 5.5 Based on your answer in question 5.4, should Machine B be favourably considered for acceplance? Motivate your answer. (1 marks) 5.6 Calculate the Internal Rate of Return of Machine B (expressed to two decimal places), using interpolation. (5 marks) INFORMATION Leo Limiled intends purchasing a new machine and has a choice between two machines viz. Machine A and Machine B. The following forecasts were made pertaining to these two machines

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