1.1 Line Fish Limited is a canning company and intends to increase its operations. They are considering investing in a new canning plant. The following data is available for the project: Cost of plant R900 000 Depreciation method Straight-line Economic life 5 years Residual value Nil Cost of capital 13% 

Additional information: 

Year Profits Cash flows 

1 R100 000 R280 000 

2 R 80 000 R260 000 

3 R 60 000 R240 000 

4 R100 000 R280 000 

5 R 90 000 R270 000 

Required: 

1.1.1 Calculate the accounting rate of return. (Answer rounded off to 2 decimal places) (4) 

1.1.2 Calculate the payback period. (Answer in years, months and days) (4) 

1.1.3 Calculate the net present value. (8) 

1.1.4 According to the net present value, would the project be accepted? Why?