Question: Liverpool pie shop has a new efficient pie making machine that it has acquired at a cost of R 7 5 0 0 0 ,
Liverpool pie shop has a new efficient pie making machine that it has acquired at a cost of R with a lifespan of years. The pie making machine will have a zeroscrapping value at the end of five years, and then be replaced with a more modern, health conscious pie making machine. The expected cash flows from the sale of pies and the costs of manufacturing these pies with all ingredients is as follows for the next five years: Year Year Year Year Year Expected cash inflows Expected cash outflows The tax rate is and the pie machine is depreciated on a straightline basis over five years, with no residual value. The discount rate is in evaluating capital projects. Required: Calculate the Net Present Value of the business over the fiveyear period using a discount rate of marks What is the maximum amount Liverpool pie shop should have paid to the earned the return envisaged?
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