QUESTION 3 Note: Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after the formula sheet. REQUIRED Use the information provided below to answer the following questions: 3.1 3.2 3.3 3.4 3.5 4.1 4.1.1 4.1.2 4.1.3 4.1.4 4.1.5 4.1.6 4.1.7 4.2 4.2.1 4.2.2 Year 4.2.3 INFORMATION Two mutually exclusive projects are being considered by the management of Cena Enterprises, viz. Project A and Project B. Each project requires an initial investment of R2 500 000 Details of the net cash inflows and net profits are as follows: 1 2 3 4 5 Calculate the Payback Period of Project A (expressed in years, months and days). Calculate the Accounting Rate of Return on average investment of Project A (expressed to two decimal places). Calculate the Net Present Value of each project. Show the calculations of the present values as well as the net present value. Sales Cost of sales Operating profit Interest expense Profit before tax Company tax Using the Net Present Value, which project should be chosen? Why? Calculate the Internal Rate of Return of Project B. Your answer must include two net present value calculations and the steps to express the IRR to two decimal places. Project A is expected to have a scrap value of R100 000 (not included in the figures above). No scrap value QUESTION 4 REQUIRED Project A R 510 000 530 000 780 000 1 350 000 600 000 Net cash flows Inventory tumover Current ratio Acid test ratio Debt-equity ratio Dividend yield Comment on the following ratios: boas now 000 005 Project B R 750 000 750 000 750 000 750 000 750 000 Debt to asset ratio Debtors collection period Return on equity 03MA 383030 ITA ZA MOTOR AKADESETAT (20 Marks) 2022 27.26% 36.87 days. INFORMATION Extracts of the financial statements of Spire Limited for 2022 are given below. SPIRE LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022 Calculate the following ratios for 2022 (expressed to two decimal places). Note: Use the formulas provided in the formula sheet only (that appear after QUESTION 5). Gross profit margin Net profit margin Project A R 30.000 50 000 300 000 870 000 120 000 11.67% Net profits Project B R 250 000 250 000 250 000 250 000 250 000 expected for Project B. The firm's cost of capital is 12%. Ignore taxes. 2021 40.34% 25.62 days 14.25% (3 marks) Y (4 marks) (6 marks) (1 mark) R (6 marks) (20 Marks) (2 marks) (2 marks) (2 marks) (2 marks) (2 marks) (2 marks) (2 marks) (2 marks) (2 marks) (2 marks) 2 970 000 1 980 000 363 000 33 000 330 000 99 000