QUESTION $5$

$(20$ Marks$)$

Note: Where discount factors are required, use only the four decimals present value tables $($Appendix $1$ and $2)$ that appear after QUESTION $5.$

$5\mathrm{.}1$

REQUIRED

Use the information given below to calculate the following:

$5\mathrm{.}1\mathrm{.}1$ Payback Period $($expressed in years, months and days$)$

$(4$ marks$)$

$5\mathrm{.}1\mathrm{.}2$ Accounting Rate of Return on average investment $($expressed to two decimal places$)$

$(5$ marks$)$

$5\mathrm{.}1\mathrm{.}3$ Net Present Value. $($Your answer must include the calculations of the present values and NPV$.)$

$(4$ marks$)$

INFORMATION

Esquire Limited intends purchasing a new machine and the following details relate to this machine:

$\backslash$table$[[$Purchase price,R$1000000,],[$Expected useful life,$4$ years,$],[$Scrap value $($not included in the figures below$),$R$200000,],[$Depreciation per year,R$200000,],[$Minimum required rate of return,$15\%,],[$Expected net cash inflows and net profit:,Net cash flows,Net profit$],[$Year $1,$R$300000,$R$100000],[$Year $2,$R$320000,$R$120000],[$Year $3,$R$370000,$R$170000],[$Year $4,?,$R$80000]]$