QUESTION 5 (20 Marks) Note: Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5. REQUIRED Study the information given below and answer the following questions 5.1 Calculate the Benefit Cost Ratio of the two investment alternatives (answer expressed to two decimal places). (6 marks) 5.2 Which investment alternative would you recommend? Explain your choice. (1 mark) 5.3 Calculate the Payback Period of Option B (answer expressed in years, months and days). (3 marks) 5.4 Calculate the Accounting Rate of Return (on average investment) of Option B (answer expressed to two decimal places). (4 marks) 5.5 Calculate the Internal Rate of Return of Option A if the net cash flow per year is R95 000 for 5 years (answer expressed to two decimal places). (6 marks) INFORMATION Azowel Limited is planning a new business venture. With R300 000 available funds to invest, it is investigating two options: Option A is to acquire an exclusive contract to operate payment machines in parkades in a city for five years. The contract requires the firm to pay R300 000 cash at the beginning of the contract. The firm expects cash revenues from the operation to be R400 000 per year and cash expenses to be R280 000 per year. Option B is to operate a photocopy shop in a shopping mall. This option would require the company to spend R300 000 for photocopy equipment that have a useful life of five years. The net cash flow per year is expected to be R105 000. The profit per year is expected to amount to R45 000. The company requires a 12% rate of return on its investment projects.