Prime Textiles is evaluating a new manufacturing project with the following forecasted details Initial amount invested is R400,000 and expected residual value is R30,000 Year Cashflows Discount factor Year 1 R80,000 0 909 Year 2 R150,000 0 826 Year 3 R140,000 0 751 Year 4 R80,000 0 683 Year 5 R70,000 0 621 Assuming that the cost of capital for the company is 9 The cash flows are after tax and depreciation is charged at R30,000 per year Tax rate is 28 Required 1 1 Calculate each of the following 1 1 1 Accounting Rate of Return 1 1 2 Discounted Payback period

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Question: Prime Textiles is evaluating a new manufacturing project with the following forecasted details: Initial amount invested is R400,000 and expected residual value is R30,000. Year

Prime Textiles is evaluating a new manufacturing project with the following forecasted details: Initial amount invested is R400,000 and expected residual value is R30,000.

Year	Cashflows	Discount factor
Year 1	R80,000	0.909
Year 2	R150,000	0.826
Year 3	R140,000	0.751
Year 4	R80,000	0.683
Year 5	R70,000	0.621

Assuming that the cost of capital for the company is 9%. The cash flows are after tax and depreciation is charged at R30,000 per year. Tax rate is 28%.

Required: 1.1 Calculate each of the following: 1.1.1 Accounting Rate of Return 1.1.2 Discounted Payback period

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