$5\mathrm{.}2$

REQUIRED

Answer the following questions based on the information provided below:

$5\mathrm{.}2\mathrm{.}1$ Calculate the Internal Rate of Return $($expressed to two decimal places$).$ Your answer must include two net present value calculations $($using consecutive cost of capital rates$)$ and interpolation.

$5\mathrm{.}2\mathrm{.}2$ Based on the IRR should the company consider purchasing the machine? Why?

INFORMATION

KTC Limited is considering an investment in a machine that costs R$400000$ and would result in cash savings of R$120000$ per year for five years. The company's cost of capital is $\backslash (12\backslash \%\backslash ).$