Question 1 Study the information given below and answer the following questions: INFORMATION Simba Limited is investigating the possibility of investing in new equipment, Nik or Nak. The net cash flows and profits (losses) for the two competing equipment are as follows: Year 1 2 3 4 5 Net cash flows R 440 000 420 000 300 000 180 000 100 000 Nik Profit (Loss) R 240 000 220 000 100 000 (20 000) (100 000) Net cash flows R 288 000 288 000 288 000 288 000 288 000 Nak Profit (Loss) The equipment costs R1 000 000 for each project and no scrap value is expected. The required rate of return is 12%. NOTE: Where present value tables are required, use tables with 4 decimal places. REQUIRED R 88 000 88 000 88 000 88 000 88 000 1.1 Calculate the Payback Period of Nik and Nak Equipment. (Answer must be expressed in years, months and days.) 1.2 Calculate the Accounting Rate of return (on average investment) of Nak Equipment (answer expressed to two decimal places). 1.3 Calculate the Net Present Value of Nik Equipment. (Round off amounts to the nearest Rand.) 1.4 Calculate the Internal Rate of Return of Nak Equipment (answer expressed to two decimal places). (25 Marks) (8 marks) (6 marks) (5 marks) (6 marks)

Question 1 (25 Marks) Study the information given below and answer the following questions: NOTE: Where present value tables are required, use tables with 4 decimal places. REQUIRED 1.1 Calculate the Payback Period of Nik and Nak Equipment. (Answer must be expressed in years, months and days.) (8 marks) 1.2 Calculate the Accounting Rate of return (on average investment) of Nak Equipment (answer expressed to two decimal places). (6 marks) 1.3 Calculate the Net Present Value of Nik Equipment. (Round off amounts to the nearest Rand.) (5 marks) 1,4 Calculate the Internal Rate of Return of Nak Equipment (answer expressed to two decimal places). (6 marks)