QUESTION $3$

$(20$ Marks$)$

Note: Where discount factors are required use only the present value tables $($Appendix $1$ and Appendix $2)$ that appear after QUESTION $3.$

$3\mathrm{.}1$

REQUIRED

Refer to the information provided below and calculate the following. $($Ignore taxes$)$

$3\mathrm{.}1\mathrm{.}1$ Payback Period $($expressed in years, months and days$).$

$(3$ marks$)$

$3\mathrm{.}1\mathrm{.}2$ Accounting Rate of Return on average investment $($expressed to two decimal places$).$

$(4$ marks$)$

$3\mathrm{.}1\mathrm{.}3$ Internal Rate of Retum $($expressed to two decimal places$)$ if the net cash flows are R$280000$ per year for five years. Your answer must include the calculations of two net present values $($using consecutive rates$/$percentages$)$ and interpolation.

$(6$ marks$)$

INFORMATION

An investment in a project is expected to have the following net cash flows and net profits:

$\backslash$table$[[$Year$,$Net cash flows,$\backslash$table$[[$Net$],[$profits$]]],[0,($R$900000),],[1,$R$300000,$R$120000],[2,$R$430000,$R$250000],[3,$R$450000,$R$270000],[4,$R$200000,$R$20000],[5,$R$190000,$R$10000]]$

No scrap value is anticipated. The minimum required rate of return is $15\%.$