Answer the questions from the information provided. 5.1 REQUIRED Calculate the following from the information provided...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Answer the questions from the information provided. 5.1 REQUIRED Calculate the following from the information provided below: 5.1.1 Payback Period of Project Alpha (expressed in years, months and days) 5.1.2 5.1.3 5.1.4 Accounting Rate of Return (on average investment) of Project Beta (expressed to two decimal places) Net Present Value of Project Beta (with amounts expressed to the nearest Rand) Internal Rate of Return (expressed to two decimal places) of Project Alpha, using interpolation INFORMATION Investec Ltd has a choice between purchasing machinery for two projects viz. Project Alpha and Project Beta Project Alpha is expected to generate a net profit of R640 000 per year for four years whilst the net profit generated by Project Beta is expected to be R150 000 (year 1), R380 000 (year 2), R1 080 000 (year 3) and R1 050 000 (year 4). Each project requires an investment of R5 000 000. Project Beta is expected to have a scrap value of R100 000 whilst no scrap value is anticipated for Project Alpha. The straight-line method of depreciation is used. The cost of capital is 12%. Ignore taxes. Answer the questions from the information provided. 5.1 REQUIRED Calculate the following from the information provided below: 5.1.1 Payback Period of Project Alpha (expressed in years, months and days) 5.1.2 5.1.3 5.1.4 Accounting Rate of Return (on average investment) of Project Beta (expressed to two decimal places) Net Present Value of Project Beta (with amounts expressed to the nearest Rand) Internal Rate of Return (expressed to two decimal places) of Project Alpha, using interpolation INFORMATION Investec Ltd has a choice between purchasing machinery for two projects viz. Project Alpha and Project Beta Project Alpha is expected to generate a net profit of R640 000 per year for four years whilst the net profit generated by Project Beta is expected to be R150 000 (year 1), R380 000 (year 2), R1 080 000 (year 3) and R1 050 000 (year 4). Each project requires an investment of R5 000 000. Project Beta is expected to have a scrap value of R100 000 whilst no scrap value is anticipated for Project Alpha. The straight-line method of depreciation is used. The cost of capital is 12%. Ignore taxes.
Expert Answer:
Answer rating: 100% (QA)
2 Average annual profit of Project Beta 150000380000108000010500004 26600004 R665000 Average investm... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
Students also viewed these finance questions
-
Answer the questions from the information provided. (20 Marks) 3.1 Use the information provided below to calculate the following independently Break-even quantity (15 marks) 3.1.1 (4 marks) 3.1.2...
-
A worker aged 45 has a choice between 2 pension plans: Plan 1 The employer makes contributions of 15% of salary each year (with no employee contribution). The contributions are made at the beginning...
-
Payback Period and Net Present Value If a project with conventional cash flows has a payback period less than the projects life, can you definitively state the algebraic sign of the NPV? Why or why...
-
Water is pumped out of a holding tank at a rate of 5 5e 0.12t liters/minute, where t is in minutes since the pump is started. If the holding tank contains 1000 liters of water when the pump is...
-
You own a bond that pays $100 in annual interest, with a $1,000 par value. It matures in 15 years. The markets required yield to maturity on a comparable-risk bond is 12 percent. a. Calculate the...
-
Explain whether each compound is soluble in aqueous NaOH, aqueous NaHCO3 both, or neither.
-
Your instructor will divide your class randomly into groups of four to six people. Acting as a team, with everyone offering ideas and one person serving as official recorder, each group will be...
-
(Multiple-Choice) 1. Which of the following is a characteristic of a corporation? a. No income tax b. Mutual agency c. Limited liability of stockholders d. Both a and b 2. Home Team, Inc., issues...
-
It is now June 30, 2023. The journal entry for the investment in the put option had already been recorded on January 1, 2023. SmartiePants Corp prepared its financial statements on March 31, 2023 as...
-
As noted earlier, the American Red Cross (ARC) gave an average gift of $20,926 to 563 families and individuals who were affected but would not be eligible for the ARC supplemental gift of...
-
Think of a problem encountered in the past by a group of which you are a member. Begin your analysis by defining the group. What type of group was it? At what stage of development was the group? And...
-
Hyclo Ltd is an underwater ship hull cleaning company. The management is concerned about the firm's management of working capital. a) The average collection period and average payment period are 41.5...
-
On January 1, Parson Freight Company issues 7.0%, 10-year bonds with a par value of $3,500,000. The bonds pay interest semiannually. The market rate of interest is 8.0% and the bond selling price was...
-
Hide Folder Information Research Report Choose a company to make a recommendation to. This company can be any actual existing company, but should not be a fictional one. It must be real because...
-
Sully Corp. currently has an EPS of $2.24, and the benchmark PE ratio for the company is 22. Earnings are expected to grow at 8 percent per year. What is your estimate of the current stock price? (Do...
-
4 Delisa Corporation has two divisions: Division L and Division Q. Data from the most recent month appear below: Total Company Division L Division Q Sales $ 541,000 $ 173,000 $ 368,000 Variable...
-
A company sells windows to a customer for a price of $2400 which includes the installation of the windows. The fair value of the installation alone is $500 and the fair value of the Windows alone is...
-
The slopes of the tangents at the points where the curve y = x2 - 4x intersects the X-axis is 1) 1 2) +2 3) +3 4) +4
-
Skyler is covered by his company's health insurance plan. The health insurance costs his company $3,500 a year. During the year, Skyler is diagnosed with a serious illness and the health insurance...
-
Ken (age 31) and Amy (age 28) Booth have brought you the following information regarding their income, expenses, and withholding for the year. They are unsure which of these items must be used to...
-
Sally and Charles Heck received the following dividends and interest during 2012: Assuming the Hecks file a joint tax return, complete Schedule B of Form 1040 (on page 2-33) for them for the 2012 tax...
-
Scientists propose that the first macromolecules in protobionts were a. DNA molecules. b. RNA molecules. c. proteins. d. all of the above.
-
Which of the following function(s) is/are carried out by piRITS or piRISC? a. Inhibits transcription of TEs b. Causes the degradation of TE RNA c. Causes chromosome breakage d. Both a and b are...
-
In the CRISPR-Cas system, what does tracrRNA bind to? a. crRNA and Cas1 protein b. crRNA and Cas2 protein c. crRNA and Cas9 protein d. Cas1 and Cas2 proteins
Study smarter with the SolutionInn App