The company estimates that its cost of capital is 14%. Calculate the payback period for Machine...
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The company estimates that its cost of capital is 14%. Calculate the payback period for Machine A and B (answers must be expressed in years, months and days). 2.1 Calculate the accounting rate of return (on average investment) for Machine A. (answer rounded off to 2 decimal places). 2.2 2.3 Calculate the net present value of each machine (round off amounts to the nearest Rand). 2.4 Calculate the internal rate of retum for Machine B. Machine A Machine B Initial cost R100 000 R110 000 Expected economic life 5 years 5 years Expected disposal/residual value R10 D00 Expected net cash inflows R. End of: Year 1 34 000 33 000 Year 2 27 000 33 000 Year 3 32 000 33 000 Year 4 30 000 33 000 Year 5 26 000 33 000 Depreciation per year 18 000 22 000 The company estimates that its cost of capital is 14%. Calculate the payback period for Machine A and B (answers must be expressed in years, months and days). 2.1 Calculate the accounting rate of return (on average investment) for Machine A. (answer rounded off to 2 decimal places). 2.2 2.3 Calculate the net present value of each machine (round off amounts to the nearest Rand). 2.4 Calculate the internal rate of retum for Machine B. Machine A Machine B Initial cost R100 000 R110 000 Expected economic life 5 years 5 years Expected disposal/residual value R10 D00 Expected net cash inflows R. End of: Year 1 34 000 33 000 Year 2 27 000 33 000 Year 3 32 000 33 000 Year 4 30 000 33 000 Year 5 26 000 33 000 Depreciation per year 18 000 22 000
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Related Book For
Essentials of corporate finance
ISBN: 9780073405131
6th Edition
Authors: Stephen A. Ross, Randolph Westerfield, Bradford D. Jordan
Posted Date:
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