QUESTION 5 (20 Marks) Answer the questions from the information provided. 5.1 REQUIRED Calculate the following from the information provided below: 5.1.1 Payback Period of Project Alpha (expressed in years, months and days) (3 marks) 5.1.2 Accounfing Rate of Return (on average irvestment) of Project Beta (expressed to two decimal placas) (3 marks) 5.1.3 Net Present Value of Project Beta (with amounts expressed to the nearest Rand) (4 marks) 5.1.4 Internal Rate of Retum (expressed to two decimal places) of Project Alpha, using interpolation. (4 marks) INFORMATION Investec Ltd has a choice between purchasing machinary for two projacts viz. Projact Alpha and Project Beta. Project Alpha is expected to ganerate a net profit of R640 000 per year for four years whilst the net profit generated by Project Beta is expected to be R150 000 (year 1), R380 000 (year 2), R1 080000 (year 3) and R1 050000 (year 4). Each project requires an investment of R5 000000 . Project Beta is expected to have a scrap valua of R100 000 whilst no scrap valua is anticipated for Project Alpha. The straight-line method of depreciation is used. The cost of capital is 12%. Ignore taxes. 5.2 REQUIRED Use the information provided below to calculate the weighted average cost of capital (expressed to two decimal placas). (6 marks) INFORMATION MVP Limited approached Nedbank for a long-term loan to partly fund the purchase of expensive, spacialised machinary. Nedbank is prepared to grant a loan of R400 000 , at a cost of 20%. MVP Limited uses the aftertax cost of debt and the marginal tax rate is 30%. MVP Limited also aims to sell 100000 ordinary shares at R6 each. The cost of the ordinary shares using the capital asset pricing model is 19.90%