required:

1.1 Calculate the payback period for the project.

1.2 Determine the Net Present Value (Npv) of the project.

QUESTION ONE 1.1. Smiles R'Us have just made an investment of R420 000 in the latest, most advanced dental machine on the market, details of which are below: Expected useful life 7 years (straight line depreciation) Salvage value 240 000 Cost of Capital 10 % Tax rate 30% Expected cash flows after tax are as follows: Cash Flows Discount factor Year 1 1 75 000 0.909 95 000 0.826 N 3 125 000 0.751 4 180 000 0.683 0.621 200 000 5 0.564 220 000 6 0.518 240 000 7