Question2 The Amos Doctors Pte Ltd (AD) is considering buying a mobile X-ray machine for its rural clinic as the Government has just announced a finding of 60% of the capital costs under a new program. The cost of the X-ray machine is $1,000.000 (after government grants). The estimated useful life is 5 years, after which it can be sold for $100,000. AD estimates that the investment will generate incremental revenues of $800,000 Incremental expenses (which include depreciation of the machine) will average $700,000 per year. Net incremental cash flows will be reinvested into the organisation. The only difference in the incremental cash flows and incremental income is attributable to depreciation expense. AD requires a minimum return on their investment of 12 percent AD uses straight-line depreciation for all capital assets. Required: (a) Compute the payback period of the mobile X-ray machine proposal. (8 marks) (b) Compute the proposal's accounting rate of return on average investment. Does it (5 marks) (c Using the tables provided below, compute the net present value of the proposal meet AD's investment objective? Comment on what the internal rate of return of the proposal might be Present Value of S1.00 Received at the End of Period Period -12% 89 6% 8% 14% 89 84 .79 .75 .93 86 .79 .74 68 91 83 .75 68 62 80 68 .59 .52 4 64 .57 esent Value of an Annuity of $1.00 Received at the End of Each Period 12% 0.89 1.69 2.40 3.04 3.61 14% 0.88 1.65 2.32 2.91 3.43 Period 6% 0.94 1.83 2.67 3.47 4.21 0.93 1.78 2.58 3.31 3.99 0 0.91 1.73 2.49 3.17 3.79 (10 marks) (d)List two (2) non-financial factors the doctors should consider when deciding (6 marks) whether to purchase the mobile X-ray machine