QUESTIONS (20) NOTE: Where present value tables are required, use tables with FOUR (4) decimal places. REQUIRED (3) Study the information given below and answer the following questions: 5.1 Calculate the Payback period of Project A (answer expressed in years, months and days). 5.2 Calculate the Accounting Rate of Return of Project A (answer expressed to two decimal places.) 5.3 Calculate the Net Present Value of both projects (amounts rounded off to the nearest Rand.) 5.4 On the basis of Net Present Value, which project should be chosen? Why? 5.5 Calculate the Internal Rate of Return of Project B if the net cash inflows are R190 000 per year for five years (answer expressed to two decimal places.) (6) (1) (6) INFORMATION The following information relates to two projects. Because of capital rationing, only one project can be accepted. Project B R500 000 4 years R Initial cost Expected useful life Expected net cash inflows: End of year 1 2 3 Project A R500 000 4 years R 200 000 170 000 165 000 155 000 175 000 175 000 175 000 175 000 4 Expected net profit: End of year 1 2 3 75 000 45 000 40 000 30 000 50 000 50 000 50 000 50 000 4 The company estimates that its cost of capital is 15%. No scrap values are expected