Sipho wants to buy the Clean Car shop around the corner. The following cash flows are involved:

Time in Years Cash Flows

2 200 000

3 - 500 000

7 700 000

8 850 000

9 - 210 000

Sipho can borrow money at 19% per annum while he can invest at 17,5% per annum.

Question 1 The present value of the cash outflows is

[1] R340 590,94.

[2] R535 703,05.

[3] R524 888,51.

[4] R357 407,06.

[5] none of the above