REQUIRED Use the information provided below to calculate the following. Where applicable, use the present value tables that appear after 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 000 per year for four years.

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

	Machine A	Machine B
Purchase Price	R800 000	R800 000
Expected useful life	4 Years	4 Years
Scrap value	0	0
Depreciation per year	R200 000	R200 000
Minimum required rate of return	12%	12%
Expected Net Profit:
End of: Year1	R20 000	R80 000
Year 2	R60 000	R80 000
Year 3	R140 000	R80 000
Year 4	R120 000	R80 000