Where applicable, use the present value tables that appear in the module guide.

3.1 REQUIRED Calculate the following for both projects from the information provided below:

3.1.1 Payback Period (expressed in years, months and days) (5 marks)

3.1.2 Accounting Rate of Return on average investment (expressed to two decimal places). (5 marks)

INFORMATION Mentos Ltd had to choose between two projects, Alpha and Beta, for which the following profits and net cash inflows are forecast:

	net profit per year		Net cash inflow per year
Year	Alpha	Beta	Alpha	beta
1	53,000.00	45,000.00	128,000.00	120,000.00
2	53,000.00	65,000.00	128,000.00	140,000.00
3	53,000.00	85,000.00	128,000.00	16,000.00
4	53,000.00	95,000.00	128,000.00	170,000.00

Each project requires an investment of R300 000. Both projects have no salvage value.

Answer rating: 100% (QA)

Question 311 Payback period is the time taken to recover the investment It can be calculated using t... View the full answer