Question 5

5.1 Payback period of both machines (expressed in years, months and days) (6 marks)

5.2 Accounting rate of return (on average investment) of machine A (expressed to two decimal places) (3 marks)

5.3 Net present value of both machines. (6 marks)

5.4 Internal rate of return of machine B (expressed to two decimal places) using interpolation if the net cash flows are R290 00 per year for four years. (5 marks)

Trump Limited intends purchasing a new machine and has the option of purchasing Machine A or Machine B. The following details apply