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Thombo Ltd wishes to install automated inventory monitoring and handling equipment at a cost of 2.4 million. This is expected to result in before-tax annual
Thombo Ltd wishes to install automated inventory monitoring and handling equipment at a cost of 2.4 million. This is expected to result in before-tax annual savings of R900 000 for six years. The expected residual value in six years' time is expected to be zero due to expected advances in technology. The company can depreciate the equipment on a straight-line basis over six years. The company's cost of capital is 12% and the corporate tax rate is 28%. Required: a) What is the NPV of the new equipment? b) What is the equipment's IRR? c) What is the payback period
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