QUESTION 5 Read the information below and answer the following questions INFORMATION The management of Mastiff Enterprises has a choice between two projects viz. Project Cos and Project Tan, each of which requires an initial investment of R2 500 000. The following information is presented to you: 5.1 5.2 5.3 Year 5.4 1 5.5 2 3 4 5 PROJECT COS Net Profit R 130 000 130 000 130 000 130 000 130 000 PROJECT TAN Net Profit R 80 000 A scrap value of R100 000 is expected for Project Tan only. The required rate of return is 15%. Depreciation is calculated using the straight-line method. 180 000 Use the information provided above to calculate the following. Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5. Payback Period of Project Tan (expressed in years, months and days). Net Present Value of Project Tan. Accounting Rate of Return on average investment of Project Tan (expressed to two decimal places). Benefit Cost Ratio of Project Cos (expressed to three decimal places). Internal Rate of Return of Project Cos (expressed to two decimal places) USING INTERPOLATION. 120 000 220 000 50 000 (3 marks) (4 marks) (4 marks) (4 marks) (5 marks) Number of Periods 1 2 3 5 6 8 9 11 12 13 14 15 16 17 18 19 20 25 30 40 50 60 1% 2% 3% 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9327 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 08116 0.9610 0.9238 0.8886 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.9420 0.8880 0.8375 0.7903 0.7462 0.7050 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 07312 0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 4% 0.8963 0.8706 5% 0.8043 6% 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.8131 0.7599 0.7107 0.6651 0.6227 0.7224 0.6496 0.8277 0.8528 0.7284 0.6232 0.8195 8% 0.8874 0.7885 0.7014 0.6246 0.5568 0.4970 0.4440 0.3971 0.3556 0.6080 9% 0.8787 0.7730 0.6810 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.8700 0.7579 0.6611 0.5775 0.5051 04423 0.3878 0.3405 0.2992 0.6730 0.5537 0.7798 0.6095 0.4776 0.6663 0.6302 0.5963 0.6864 0.5703 0.4746 0.3957 0.5835 0.5470 0.4564 0.3769 10% 11% 12% 13% 0.9053 0.8203 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3522 0.3220 0.2946 0.2697 0.3715 0.2281 0.1407 0.9091 0.9009 0.3305 0.8613 0.7430 0.6419 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0,2090 0.3751 0.2953 0.2330 0.5645 0.5346 0.3118 0.2584 0.2145 0.5132 04817 0.4665 0.4339 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 03173 0.2875 0.8929 0.8850 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0 1883 0.0872 0.0543 0.0339 0.7972 0.7831 0.6830 0.6587 0.6355 0.6133 0.5921 0.9143 0.8368 0.7664 0.7026 06446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3909 0.3606 0.3329 0.3075 0.2843 0.2630 0.2434 0.2255 0.2090 0.1938 0.1342 0.6209 0.5935 0.5674 0.5428 0.5194 14% 15% 16% 17% 0.7118 0.6931 0.6750 0.6575 0.8772 0.8696 0.7696 0.7561 0.3186 0.2858 0.2567 0.4039 0.3762 0.3506 0.2897 02575 02292 0.8621 0.8547 0.2607 0.2366 18% 19% 20% 0.6407 0.6244 0.6086 0.5934 0.5066 0.4803 0.4556 0.4323 0.4104 0.3898 0.3704 0.3521 0.3349 0.2621 0.8475 0.8403 0.7432 0.7305 0.7182 0.7062 0.6944 0.6400 0.4523 0,4251 0.3996 0.3759 0.3538 0.3332 0.3139 0.2959 0.2791 0.2097 0.5718 0.5523 0.5337 0.5158 0.4987 0.4823 0.4096 0.4972 0.4761 04561 0.4371 0.4190 0.4019 0.3277 0.8444 0.7142 0.6050 0.5134 0.4363 0.3714 0.3166 0.2703 02311 0.1978 01696 01456 0.1252 0.1078 0.0929 0.0802 0.0693 0.0600 0.0520 0.0451 0.0225 0.8360 0.7002 0.5874 0.4936 0.4155 0.3503 0.2959 0.2502 0.2120 0.1799 01528 0.1300 0.1108 0.0946 0,0808 0.0691 0.0592 0.0508 0.0437 0.0376 0.0180 0.3269 0.3050 0.2848 0.2660 0.2487 0.2326 0.1678 0.8333 0.8000 0.2472 0.2267 0.2080 0.1911 0.1756 0.1615 0.1074 25% 0.5787 0.5120 0.2149 0.1954 0.1778 0.1619 0.1476 0.1346 0.0859 0.2307 0.2076 0.1869 0.1685 0.1520 0.1372 0.1240 0.1122 0.0687 0.2633 0.2320 0.2046 0.1807 0.1597 0.1413 0.1252 0.1110 0.0985 0.0876 0.0779 0.0440 0.2765 0.2317 0.1945 0.1635 0.1377 0.1161 0.0981 0.0829 0.0703 0.0596 0.2042 0.1821 0.1625 0.1452 0.1299 0.1163 0.1042 0.0935 0.0550 0.1827 0.1599 0.1401 0.1229 0.1079 0.0949 0.0835 0.0736 0.0649 0.0352 01631 0.1415 0.1229 0.1069 0.0930 0.0811 0.0708 0.0618 0.0541 0.0281 0.6717 0.4529 0.3066 0.2083 0.1420 0.0972 0.0668 0.0460 0.0318 0.0221 0.0154 0.0107 0.0075 0.0053 0.0037 0.0026 0.0019 0.0013 0.0010 0.7419 0.5621 04120 0.3083 02314 0.1741 0.1314 0.0994 0.0754 0.0573 0.0437 0.0334 0.0256 0.0196 0.0151 0.0116 0.0090 0.0070 0.0054 0.0042 0.0012 0.5504 0.3048 0.1697 0.0961 0.0535 0.0303 0.0173 0.0099 0.0057 0.0033 0.0019 0.0011 0.0007 0.0004 0.0002 0.0001 0.0506 0.0431 0.0367 0.0313 0.0144 0.1784 0.1486 0.1240 0.1037 0.0868 0.0728 0.0611 0.0514 0.0433 0.0365 0.0308 0.0261 0.0115 0.1842 0.1460 0.1160 0.0923 0.0736 0.0588 0.0471 0.0378 0.0304 0.0245 0.0197 0.0160 0.0129 0.0105 0.0038 0.0213 0.0134 0.0085 0.0054 0.0035 0.0022 0.0014 0.0009 0.0006 0.0004 0.0003 0.0002 0.0001 . . APPENDIX 2: PRESENT VALUE OF A REGULAR ANNUITY OF R1 PER PERIOD FOR N PERIODS 0.0007 0.0001 . 0.0001 . . Number d Periods 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 25 30 40 50 60 1% 2% 0.9901 0.9804 0.9709 1.9704 1.9416 2.9410 2.8839 28286 3% 7.6517 1.9135 1.8861 9.4713 8.9826 4% 3.9020 3.8077 37171 3.6299 3.5460 34651 4.8534 4.7135 4.5797 4.4518 4.3295 42124 5.7955 5.6014 5.4172 5.2421 5.0757 2.7751 7.3255 7.0197 6.7327 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 11.2561 10.5753 9.9540 9.3851 16.3963 14.9920 5% 8.5302 8.1109 6.7282 6.4720 6.2303 6.0021 5.7864 5.5824 5.3893 13.0037 12.1062 11.2961 10.5631 25.8077 13.8651 12.8493 11.9379 11.1184 6% 2.7232 26730 22.3965 8.5660 8.1622 7.7861 7,4353 7.1078 6.8017 6.5152 22.0232 19.5235 17.4131 12.1337 11.3484 10.6350 9.9856 9.3936 8.8527 1.8594 1.8334 1.8080 1.7833 1.7591 1.7355 1.7125 32.8347 27.3555 23.1148 7.7217 7.3601 10.3676 9.7868 9.2526 8.7605 8.3064 7.8869 7.4987 7.1390 9.8986 14.7179 13.5777 12.5611 11.6523 10.8378 10.1059 15.5623 14.2919 13.1661 12.1657 11.2741 10.4773 17,2260 15.6785 14.3238 13.1339 12.0853 7% 9.2950 10.3797 9.7122 8.8633 B3838 7,9427 13.7535 12.6593 11.6896 10.8276 2.6243 2.5771 18.0456 16.3514 14.8775 13.5903 12.4622 11.4699 3.3872 3.3121 4.1002 3.9927 8% 7.0236 6.7101 9.1079 4.9173 4.7665 4.6229 4.4859 4.3553 4.2305 4.1114 3.9975 3.8887 5.2064 8.3577 7.9038 9.7632 8.7455 8.2442 11.1581 10.3356 6.2469 10.5940 9.4466 8.8514 15.6221 14.0939 12.7834 11.6536 7.5361 39,1961 31.4236 25.7298 21.4822 18.2559 15.7619 13.8007 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 51461 4.9676 4.7988 4.6389 4.4873 4.3436 4.2072 4.0776 3.9544 3.8372 8.5595 9% 9.1216 9.8181 19.6004 17.2920 15.3725 13.7648 12.4090 11.2578 10% 11% 0.9091 19.7928 17.1591 15.0463 13.3317 11.9246 2.5313 24869 24437 3.2397 3.1699 3 1024 3.8897 3.7908 3.6959 0.9009 6.4177 6.1446 6.8052 6.4951 7,1607 6.8137 12% 0.8929 1.6901 13% 9.6036 8.9501 8.3649 0.8850 5.0330 4.8684 4.7122 4.5638 4.4226 10.6748 9.8226 14% 15% 16% 0.8772 0.8696 0.8621 10.2737 1.6681 1.6467 1.6257 1.6052 1.5852 1.5656 1.5465 1.5278 2.4018 2.3612 2.3216 2.2832 2.2459 22096 2.1743 2.1399 2.1066 3.0373 2.9745 2.9137 2.8550 27982 27432 3.6048 3.5172 3.4331 3.3522 32743 3.1993 3.1272 3.0576 2.9906 17% 18% 19% 20% 5.9952 5.7590 5.5370 5.3282 5.1317 4.9464 4.7716 4.6065 4.4506 4.3038 4.1633 4.0310 0.8547 0.8475 0.8403 0.8333 3.7845 3.6847 3.5892 3.4976 3.4098 3.3255 4.2883 4.1604 4.0386 3.9224 3.8115 7,4869 7.1034 6.7499 6.4235 6.1218 5.8424 5.5831 7.7862 7.3667 6.9819 6.6282 6.3025 6.0021 5.7245 2.6901 2.6386 2.5887 5.8892 5.6502 5.4262 5.2161 5.0188 4.8332 4.6586 4.4941 4.3389 4.1925 6.2065 5.9377 5.6869 5.4527 5.2337 5.0286 4.8364 4.6560 4.4865 4.3271 10.0591 9.3719 8.7556 8.2014 7.7016 7.2497 6.8399 6.4674 6.1280 5.8178 5.5339 5.2732 5.0333 4.8122 6.4924 6.1944 5.9176 5.6603 5.4206 5.1971 4.9684 4.7932 4.6105 44392 3.7057 3.6046 8.3126 7.8237 7.3792 6.9740 6.6039 6.2651 5.9542 5.6685 5.4053 8.0607 7.6061 7.1909 6.8109 6.4624 6.1422 5.8474 5.5755 5.3242 5.0916 4.8759 4.6755 5.3423 5.1183 4.9095 4.7147 4.5327 5.4675 5.2293 5.0081 4.8023 4.6106 8.5436 8.0216 7.5488 7.1196 6.7291 6.3729 6.0472 5.7487 5.4746 5.2223 4.9897 4.7746 9.4269 8.6938 8.0552 7.4957 7.0027 6.5660 6.1772 9.1285 8.5136 7.9633 7.4694 7.0248 6.6231 6.2593 5.9288 5.6278 5.3527 5.1009 4.8696 10.7574 9.7791 8.9511 8.2438 7.6344 7.1050 6.6418 6.2335 5.1624 4.9377 4.7296 7.8393 7.3658 6.9380 6.5504 6.1982 5.8775 5.5845 5.3162 5.0700 4.8435 12.2335 10.9617 9.9148 9.0417 8.3045 7.6752 7.1327 6.6605 6.2463 9.0770 8.4217 7.8431 7.3300 6.8729 6.4641 6.0971 5.7662 5.4669 5.1951 4.9476 5.8294 5.5168 5.2347 4.9789 5.8713 5.5482 5.2582 4.9966 5.8801 5.5541 5.2623 4.9996 44.9550 34.7609 27.6756 22.6235 18.9293 16.1614 14.0392 12.3766 11.0480 9.9672 9.0736 8.3240 7.6873 7.1401 6.6651 6.2402 5.8819 5.5553 5.2630 4.9999