Highveld Construction (Pty) Ltd is considering replacing two of its Front End Loader vehicles with a...
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Highveld Construction (Pty) Ltd is considering replacing two of its Front End Loader vehicles with a new, modern high-tech computer controlled Front End Loader that can be operated by remote control and does not require a human operator. Management has identified such vehicle, the Humanoid. They have collected the following information about this this vehicle: Year 1 2 3 4 5 Cash flows R1 400 000 R1 350 000 R1 200 000 R950 000 R650 000 The initial required investment is R3 300 000, and the company's cost of capital is 16%. Required: Note: Show all your calculations and round off all calculations to the nearest whole number. 4.1 Use the information provided to calculate the Net Present Value and Internal Rate of Return for this proposed investment. (Use 25% as the alternative cost of capital.) (22) (5) 4.2 Should the company invest in this new machine? Motivate your answer. Highveld Construction (Pty) Ltd is considering replacing two of its Front End Loader vehicles with a new, modern high-tech computer controlled Front End Loader that can be operated by remote control and does not require a human operator. Management has identified such vehicle, the Humanoid. They have collected the following information about this this vehicle: Year 1 2 3 4 5 Cash flows R1 400 000 R1 350 000 R1 200 000 R950 000 R650 000 The initial required investment is R3 300 000, and the company's cost of capital is 16%. Required: Note: Show all your calculations and round off all calculations to the nearest whole number. 4.1 Use the information provided to calculate the Net Present Value and Internal Rate of Return for this proposed investment. (Use 25% as the alternative cost of capital.) (22) (5) 4.2 Should the company invest in this new machine? Motivate your answer.
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To calculate the Net Present Value NPV and Internal Rate of Return IRR for the proposed investment in the Humanoid vehicle well use a cost of capital ... View the full answer
Related Book For
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts
Posted Date:
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