Question: Question 4 [25] Profiling (Ply) Ltd needs to replace one of its 3D printers. Management has identified an ideal replacement 3D printer. It is a

 Question 4 [25] Profiling (Ply) Ltd needs to replace one of

Question 4 [25] Profiling (Ply) Ltd needs to replace one of its 3D printers. Management has identified an ideal replacement 3D printer. It is a high-tech 3D printer that is controlled and operated remotely. They have estimated the net cash flows from investing in this printer as follows: Year Cash flow R170 000 2 R185 000 3 R220 000 4 R250 000 5 R200 000 1 . Additional information: The initial required investment is R600 000. The company's cost of capital is 16%. Required: Show all calculations and round off all final answers to the nearest whole number. 4.1. Use the information provided to calculate the net present value (NPV) of the printer using the current cost of capital as well as 20% as an alternative cost of capital. (14) 4.2. Use the results of the calculations in 4.1 to calculate the internal rate of return (IRR) of the investment (8) 4.3 Should the company invest in this new printer? Give reasons for your answer (3)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!