QUESTION 5 (20 Marks) 5.3 Note: Where discount factors are required, use only the present value tables (Appendix 1 and 2) REQUIRED that appear after QUESTION 5. Use the information given below to answer the following questions: 5.1 5.3.1 Calculate the Internal Rate of Return (expressed to two decimal places). Your REQUIRED answer must include two net present value calculations (using consecutive cost From the information provided below which project would you recommend? Substantiate of capital rates) and interpolation. (6 marks) your answer by showing the relevant calculations that take the time value of money into 5.3.2 Based on the IRR should the company consider purchasing the machine? Why? (1 mark) account. Note: The IRR is not required. (8 marks) INFORMATION INFORMATION Venus Limited is investigating an opportunity to purchase a machine for R640 000. The machine is MK Enterprises has R200 000 which it will invest if the investment earns at least 16% per annum. Three expected generate net cash flows of R180 000 per annum for five years. The company's cost of capital projects are being considered, each of which will cost R200 000 to commence. is 16%. Project X would earn R220 000 at the end of the first year. Project Y would earn R250 000 at the end of the second year. Project Z would earn R120 000 at the end of the first year and R125 000 at the end of the second year. END OF PAPER 5.2 REQUIRED Study the information given below to determine whether the company should accept the investment opportunity or not. Motivate your answer by calculating the Accounting Rate of Return on average investment (expressed to two decimal places). (5 marks) INFORMATION Universal Limited is a manufacturing company and its management is appraising the production and sale of a new product. This would involve the purchase of a new machine with a cost price of R1 200 000 and an expected scrap/salvage value of R200 000. The net cash flows from the machine are estimated to be R300 000 per year for eight years. Depreciation is expected to be R125 000 per year. The company's cost of capital is 18%