Question: can you kindly help me answer this question QUESTION ONE [25] Gogo Limitad has just made an investment of R390 000 in a new machine
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can you kindly help me answer this question
QUESTION ONE [25] Gogo Limitad has just made an investment of R390 000 in a new machine Details of the machine are as follows: Expected useful lite 5 years (straight line depreciation) Salvage value 10 000 (sold as scrap metal) . Cost of capital 10% The tax rate is 30% Expected cash flows are as follows: Year B0 000 120 000 100000 110 000 90 000 1 2 3 4 5 (5) (5) Required: 1.1 Calculate the Payback Period. 12 Determine the Accounting / Average Rate of Return (ARR) 1.3 Gogo Limited requires a payback period of no more than 4 years and a retum of at Jeast 25%. On the basis of these criteria, should this project be accepted? Explain your answer Calculate the Net Present Value for the project. Should the project be accepted on this basis? Explain your answer To make your ultimate decision, which method will you choose? Why? (4) 1.4 (7) 1.5
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