REQUIRED

Answer the following questions based on the information provided below:

$5\mathrm{.}2\mathrm{.}1$ Calculate the Internal Rate of Return $($expressed to two decimal places$).$ Your

answer must include two net present value calculations $($using consecutive cost

of capital rates$)$ and interpolation.

$(6$ marks$)$

$5\mathrm{.}2\mathrm{.}2$ Based on the IRR should the company consider purchasing the machine? Why? $(1$ mark$)$

INFORMATION

KTC Limited is considering an investment in a machine that costs R$400000$ and would result in cash

savings of R$120000$ per year for five years. The company$$s cost of capital is $12\%$