Use the information provided to answer the questions.

Use the information provided below to calculate the following.

Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after.

QUESTION 5.

5.1.1 Calculate the Payback Period of Project A (expressed in years, months and days). (3 marks)

INFORMATION Zeda Enterprises has the option to invest in machinery in projects A and B but finance is only available to invest in one of them. You are given the following projected data: Initial cost Scrap value Depreciation per year Net profit Year 1 Year 2 Year 3 Year 4 Project A R300 000 R40 000 R52 000 R20 000 R30 000 R50 000 R60 000 Project B R300 000 0 R60 000 Year 5 Net cash flows Year 1 Year 2 Year 3 Year 4 Year 5 Additional information The discount rate used by the company is 12%. R10 000 R90 000 R90 000 R90 000 R90 000 R90 000