QUESTION 5 (20 MARKS) 5.1 REQUIRED Use the information provided below to calculate the following. Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5. 5.1.1 Payback Period (expressed in years, months and days) (3 marks) 5.1.2 Accounting Rate of Return, on average investment (expressed to two decimal places) (4 marks) 5.1.3 Internal Rate of Return (expressed to two decimal places) (6 marks) INFORMATION R1 200 000 4 years Redd Ltd intends purchasing a machine. The following details relate to this machine: Purchase price Expected useful life Minimum required rate of return Scrap value Depreciation Net profit per year 12% RO Straight-line method 15 year R40 000 2nd year R100 000 3rd year R130 000 4th year R150 000 62 APPENDIX 1 Present value of RI 1% 2% 3% 5% 6% 7% 8% 9% 10% 11% 12% % 13% 14% 15% 16% 17% 18% 19% 20% 25% Number of Periods 1 2 0.8403 0.7062 0.8333 0.6944 3 4 5 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.98030.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 0.8163 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0.9259 0.9174 0.9091 0.9009 0.90090.8929 0.8850 0.8772 0.8696 0.8621 0.8547 0.8475 0.8573 0.8417 0.8264 0.8116 0.7972 0.7831 0.7695 0.7561 0.7432 0.7305 0.7182 0.7938 0.77220.7513 0.7722 0.7513 0.7312 0.7118 0.7312 0.7118 0.6931 0.6750 0.6575 0.6407 0.6244 0.6086 0.7350 0.7084 0.6830 0.6587 0.6355 0.6133 0.5921 0.5718 0.5523 0.5337 0.5158 0.6806 0.6499 0.6209 0.5935 0.5674 0.54280.5194 0.4972 0.4761 0.4561 0.4371 0.5934 0.5787 0.4987 0.4823 0.4190 0.4019 0.8000 0.6400 0.5120 0.4096 0.3277 6 7 8 9 0.9420 0.8880 0.8375 0.79030.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.9327 0.8706 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.9235 0.8535 0.78940.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.9143 0.8368 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.9053 0.8203 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.4224 0.3855 0.5346 0.5066 0.4803 0.4556 0.4817 0.4523 0.4251 0.3996 0.4339 0.4039 0.3762 0.3506 0.3909 0.3606 0.3329 0.3075 0.35220.3220 0.32200.29460.2697 0.4323 0.4104 0.3898 0.3704 0.3521 0.3349 0.2621 0.3759 0.3538 0.3332 0.3139 0.2959 0.2791 0.2097 0.3269 0.3050 0.2848 0.2660 0.2660 0.2487 0.2326 0.1678 0.2843 0.2630 0.2434 0.2255 0.2090 0.1938 0.1342 0.2472 0.2267 0.2080 0.1911 0.1756 0.1615 0.1074 10 11 12 13 14 0.8963 0.8043 0.7224 0.6496 0.5847 0.5268 0.4751 0.4751 0.4289 0.3875 0.35050.3173 0.3505 0.3173 0.2875 0.2875 0.2607 0.2366 0.2149 0.1954 0.1778 0.1619 0.1476 0.1346 0.0859 0.8874 0.7885 0.7014 0.6246 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2858 0.2567 0.2307 0.2076 0.1869 0.1685 0.1520 0.1372 0.1240 0.1122 0.0687 0.8787 0.7730 0.6810 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2575 0.2292 0.2042 0.1821 0.1625 0.1452 0.1299 0.1163 0.1042 0.0935 0.0550 0.87000.7579 0.66110.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 0.2320 0.2046 0.1807 0.1597 0.1413 0.12520.1110 0.09850.0876 0.0779 0.0876 0.0779 0.0440 0.8613 0.7430 0.6419 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.2090 0.1827 0.1599 0.1401 0.1229 0.1079 0.0949 0.0835 0.0736 0.0649 0.0352 15 16 17 18 0.8528 0.7284 0.62320.53390.4581 0.3936 0.3387 0.3387 0.2919 0.2519 0.21760.1883 0.1631 0.1415 0.1229 0.1229 0.1069 0.10690.0930 0.0811 0.0708 0.8444 0.7142 0.7142 0.6050 0.5134 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.1696 0.1456 0.1456 0.1252 0.1078 0.0929 0.0802 0.0693 0.0600 0.8360 0.7002 0.5874 0.4936 0.4155 0.3503 0.2959 0.25020 2120 0.1799 0.1528 0.1300 0.1108 0.0946 0.0808 0.0691 0.0592 0.0508 0.8277 0.6864 0.5703 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1377 0.1161 0.0981 0.0829 0.0703 0.0596 0.0506 0.0431 0.8195 0.6730 0.5537 0.4564 0.3769 0.3118 0.2584 0.21450.1784 0.1486 0.1240 0.12400.1037 0.1037 0.0868 0.0728 0.0728 0.0611 0.0514 0.0433 0.0365 0.0618 0.0541 0.0281 0.05200.0451 0.0225 0.0437 0.0376 0.0180 0.0367 0.0313 0.0144 0.0308 0.0261 0.0115 19 20 0.0923 25 30 40 0.0437 0.7798 0.6095 0.4776 0.3751 0.29530.2330 0.2330 0.1842 0.1460 0.1160 0.07360.0588 0.0471 0.0378 0.0304 0.0245 0.0197 0.0160 0.0129 0.0105 0.0038 0.7419 0.5521 0.4120 0.3083 0.2314 0.1741 0.1314 0.0994 0.0754 0.0754 0.0573 0.0334 0.0256 0.0196 0.0151 0.0151 0.0116 0.0090 0.0070 0.0054 0.0042 0.0012 0.67170.45290.3066 0.2083 0.3066 0.2083 0.14200.0972 0.0668 0.0460 0.0318 0.0221 0.0154 0.0075 0.0053 0.0037 0.0037 0.0026 0.00190.0013 0.0010 0.0007 0.0001 0.6080 0.3715 0.2281 0.1407 0.0872 0.0543 0.0339 0.0213 0.0134 0.0085 0.0054 0.0035 0.0022 0.0014 0.0009 0.0006 0.0004 0.0003 0.0002 0.0001 0.5504 0.3048 0.1697 0.0951 0.0535 0.0303 0.01730.0099 0.0057 0.0033 0.0019 0.0011 0.0007 0.0004 0.0002 0.0001 0.0001 0.0107 * 50 60 * * APPENDIX 2 Present value of a regular annuity of Rl per period for n periods 1% 2% 3% 3 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% Number of Periods 1 2 0.9901 1.9704 0.9804 1.9416 0.9709 1.9135 0.9524 1.8594 0.9346 1.8080 3 4 2.9410 3.9020 2.8839 3.8077 2.8286 3.7171 0.9615 1.8861 2.7751 3.6299 4.4518 2.7232 3.5460 4.3295 0.9434 1.8334 2.6730 3.4651 4.2124 2.6243 3.3872 0.9259 1.7833 2.5771 3.3121 3.9927 0.9174 0.9091 0.90090.8929 0.8850 0.87720.8696 0.8621 0.8547 0.8475 0.8403 0.8333 1.75911.7355 1.7125 1.6901 1.6681 1.6467 1.6257 1.6052 1.5852 1.5656 1.5465 1.5278 2.5313 2.48692.4437 2.4018 2.3612 2.3216 2.2832 2.2459 2.20962.1743 2.1399 2.1065 3.2397 3.1699 3.1024 3.0373 2.9745 2.9137 2.8550 2.7982 2.7432 2.6901 2.6386 2.5887 3.8897 3.7908 3.69593.6048 3.5172 3.4331 3.3522 3.2743 3.27433.1993 3.1993 3.1272 3.0576 2.9906 5 4.8534 4.7135 4.5797 4.1002 6 5.6014 5.2421 5.0757 4.9173 4.6229 7 8 5.7955 6.7282 7.6517 8.5660 9.4713 5.4172 6.2303 7.0197 5.2064 6.0021 6.7327 4.7665 5.3893 5.9713 5.7864 6.4632 5.7466 6.4720 7.3255 8.1622 8.9826 5.5824 6.2098 6.8017 7.3601 4.48594.3553 4.2305 4.1114 3.9975 3.8887 5.0330 4.86844.7122 4.5638 4.4226 | 4.2883 5.5348 5.3349 5.3349 5.1461 4.9676 4.79884.6389 5.9952 5.75905.5370 5.3282 5.5370 5.3282 5.1317 4.9464 6.41776.1446 5.8892 5.65025.42625.2161 3.7845 3.68473.5892 3.4976 3.4098 3.3255 4.1604 4.0386 3.9224 3.8115 3.7057 3.6046 4.48734.3436 4.2072 4.0776 3.9544 3.8372 4.7716 4.6065 4.4506 4.3038 4.1633 4.0310 5.0188 4.8332 4.6586 4.4941 4.3389 4.1925 9 10 7.7861 8.5302 7.4353 8.1109 7.1078 7.7217 6.5152 7.0236 6.2469 6.7101 11 12 13 10.3676 9.7868 9.2526 11.2551 10.5753 9.9540 12.1337 11 3484 10.6350 13.0037 12.1062 11.2961 13.8651 12.8493 11.9379 8.7605 9.3851 9.9856 8.3064 8.8633 9.3936 7.8869 8.3838 8.8527 7.4987 7.9427 8.3577 7.1390 7.5361 7.9038 8.2442 8.5595 6.80526.4951 7.1607 6.8137 7.4869 7.1034 7.78627.3667 8.0607 7.6061 6.2065 5.9377 5.93775.6869 5.4527 5.2337 5.02864.8364 4.65604.4865 4.3271 6.4924 6.19445.9176 5.6603 5.42065.1971 4.9884 4.7932 4.6105 4.4392 6.7499 6.4235 6.1218 5.84245.5831 5.3423 5.1183 4.9095 4.7147 4.5327 6.98196.6282 6.30256.0021 5.72455.46755.2293 5.0081 4.8023 4.6106 7.19096.8109 6.4624 6.1422 5.8474 5.57555.32425.0916 4.8759 4.6755 14 15 10.5631 11.1184 9.8986 10.3797 9.2950 9.7122 8.7455 9.1079 16 17 18 14.7179 13.5777 12.561111.6523 10.8378 10.1059 9.4466 15.562314.291913.1661 12.1657 11.2741 10.4773 9.7632 16.3983 14.9920 13.7535 12.6593 11.6896 10.8276 10.8276 10.0591 17.2260 15.6785 14.3238 13.1339 12.0853 11.1581 10.3356 18.0456 16.3514 14.8775 13.5903 12.4622 11.4699 10.5940 8.8514 9.1216 9.3719 8.31267.82377.3792 6.97406.60396.2651 6.2651 5.9542 5.66855.4053 5.1624 4.9377 4.7296 8.5436 8.0216 7.5488 7.1196 6.7291 6.37296.04725.7487 5.4746 5.22234.9897 4.7746 8.7556 8.2014 7.7016 7.24976.8399 6.4674 6.1280 5.81785.53395.27325.03334.8122 8.9501 8.36497.83937.3658 6.93806.5504 6.1982 5.87755.5845 5.3162 5.5845 5.31625.0700 5.0700 4.8435 9.1285 8.5136 7.9633 7.4694 7.0248 6.6231 6.2593 5.92885.6278 5.3527 5.1009 4.8696 19 20 9.6036 9.8181 25 30 40 50 60 22.0232 19.5235 17.4131 17.4131 15.6221 14.0939 12.7834 11.6536 10.6748 9.8226 9.07708.4217 7.8431 7.8431 7.3300 6.8729 6.4641 6.09715.7662 5.4669 5.1951 4.9476 25.8077 22.3965 19.600417.2920 15.3725 13.7648 12.4090 11.2578 10.2737 10.27379.4269 8.6938 8.0552 7.4957 7.0027 6.56606.1772 6.1772 5.8294 5.5168 5.2347 5.2347 4.9789 32.8347 27.3555 23.1148 19.7928 17.1591 15.0463 15.046313.3317 11.9246 10.75749.7791 8.9511 8.2438 7.6344 7.10506.64186.2335 5.8713 5.5482 5.5482 5.2582 4.9966 39.1961 31.4236 25.7298 21.4822 18.2559 15.7619 13.800712. 2335 10.9617 9.91489.0417 8.30457.6752 7.67527.1327 6.6605 6.2463 5.8801 5.8801 5.5541 5.2623 4.9995 44.9550 34.760927.6756 22.6235 18.9293 16.1614 14.0392 12.3766 | 11.0480 11.0480 9.96729.07368.3240 7.68737.1401 6.6651 6.24025.8819 5.5553 5.2630 4.9999