Question: Read the case study scenario below and answer the questions based on the case study. Based on the information in question 1, below is a

 Read the case study scenario below and answer the questions based

Read the case study scenario below and answer the questions based on the case study. Based on the information in question 1, below is a summary of all investment options: Details Machine A Machine B Machine C Machine D NPV R520 000 R1 000 000 (R95 000) R750 000 Useful Life 5 years 7 years 4 years 6 years Based on the above, the CFO has decided that Machine B should be selected as it has the highest NPV. The WACC rate is 15%. The machine can either be financed through a loan or a lease of the relevant machinery. Below are the details pertaining to the financing options: Loan - total is R800 000 and payment period 10 years. Lease -annual lease instalment is R150 000 over 10 years. The cost of financing is 8%. (12) 2.1 Based on the information above, discuss which investment would be most suitable and why. 2.2 Calculate the net present cost of the financing options and recommend which form of financing would be most suitable. 2.3 Discuss the difference between the investing and the financing option. (8) (5) [25 marks]

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