QUESTION $5$

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

REQUIRED

Study the information provided below and answer the following questions:

$5\mathrm{.}1$ Calculate the payback period $($expressed in years, months and days$)$

$5\mathrm{.}2$ Explain why you would not recommend payback period to evaluate capital investment

Information

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

Purchase price R$1200000$

Expected useful life $5$ years