Global Investments is considering the following project: The project has an investment of R500 000. The...

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Global Investments is considering the following project: The project has an investment of R500 000. The depreciation is calculated on the straight-line method. The net profits after-tax and cash inflows are expected to be as follows: Net profits Cash flows Year R R 1 6 000 106 000 2 10 000 110 000 3 20 000 120 000 4 40 000 140 000 5 50 000 150 000 The firm's cost of capital is 14%. Required: 4.1 Calculate the accounting rate of return. (Two decimal places) 4.2 Calculate the payback period. (Years, months and days) 4.3 If a payback period of three years is required, would the project be accepted? Why? 4.4 Calculate the net present value. (Amounts to the nearest Rand) 4.5 Would the project be accepted? Why? Global Investments is considering the following project: The project has an investment of R500 000. The depreciation is calculated on the straight-line method. The net profits after-tax and cash inflows are expected to be as follows: Net profits Cash flows Year R R 1 6 000 106 000 2 10 000 110 000 3 20 000 120 000 4 40 000 140 000 5 50 000 150 000 The firm's cost of capital is 14%. Required: 4.1 Calculate the accounting rate of return. (Two decimal places) 4.2 Calculate the payback period. (Years, months and days) 4.3 If a payback period of three years is required, would the project be accepted? Why? 4.4 Calculate the net present value. (Amounts to the nearest Rand) 4.5 Would the project be accepted? Why?

Answer rating: 100% (QA)

Given E Project cost 2 R 500000 Depreciation method Straightline method Project term 5 yrs De... View the full answer