_{Use the information provided below to answer the following questions:}

_{5.1 Calculate the Payback Period of Machine A (expressed in years, months and days.) (3 marks)}

_{5.2 Calculate the Accounting Rate of Return on average investment of Machine A (expressed to two decimal places). (4 marks)}

_{5.3 Calculate the Net Present Value (NPV) of both machines. (6 marks)}

_{5.4 Based on the Net Present Value, which machine should Aspen Limited purchase? Why? (1 mark)}

_{5.5 Calculate the Internal Rate of Return (IRR) of Machine B (expressed to two decimal places). Your answer must include two net present value calculations (using consecutive rates/percentages) and interpolation. (6 marks)}

_{INFORMATION Aspen Limited intends purchasing a new machine and has the option of purchasing Machine A or Machine B. The following details apply. Ignore taxes. Machine A Machine B Purchase price R500 000 R500 000 Expected useful life 4 years 4 years Scrap value 0 0 Depreciation per year R125 000 R125 000 Minimum required rate of return 12% 12% Expected net cash inflows Year 1 ? R180 000 Year 2 ? R180 000 Year 3 ? R180 000 Year 4 ? R180 000 Expected net profit Year 1 R15 000 ? Year 2 R35 000 ? Year 3 R95 000 ? Year 4 R75 000 ?}