Note: Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after REQUIRED

Use the information given below to calculate the following:

5.1

Payback Period of both projects (answers expressed in years and months).

(4 marks)

5.2

Accounting Rate of Return of Project A (answer expressed to two decimal places).

(3 marks)

5.3

Net Present Value (NPV) of both projects (amounts rounded off to the nearest Rand).

(6 marks)

5.4

Profitability Index of Project B (answer expressed to two decimal places).

(2 marks)

5.5

Internal Rate of Return of Project B (answer expressed to two decimal places).

(5 marks)

INFORMATION
Gentry Ltd had to choose between these two projects, Project A or Project B, for which the following net cash inflows have been forecasted:
Year 1 2 3 4	Project A R60 000 R160 000 R200 000 R360 000	Project B R172 000 R172 000 R172 000 R172 000
Project A requires an investment of R560 000 while project Project B requires an investment of R500 000. The average annual profit of projects Project A and Project B are expected to be R55 000 and R47 000 respectively. Both projects are expected to have no salvage value. The minimum required rate of return on these projects is 12%.