QUESTION THREE [25] Abner Ltd that operate in the automobile industry is considering replacing a machine with a new one that requires a R4 200000 investment. The operating cash inflows over the next 9 years will be R740 000 per annum and the cash inflow for the 10th year will be R220 000 . Thereafter the machine will be sold for R400 000. The company uses straight-line depreciation. The cost of capital for projects of similar risk is 11%. Note: Average profit is R308 000. Ignore Taxation Required: 3.1 If an acceptable payback period is 6 years, determine the payback period and state if the investment is acceptable or not. 3.2 Determine the investment's Accounting Rate of Return (ARR). 3.3 Based on the ARR, advise if the ARR is acceptable or not based on a target ARR of 20%. 3.4 Calculate the net present value (NPV) and comment on the viability of the proposed investment. 3.5 Discuss why the NPV method is the preferred choice for investment appraisals. (3)