5.2 REQUIRED Study the information provided below and answer the following questions. Ignore taxes. 5.2.1 Compute the Net Present Value. Your answer must include the calculations of the present values as well as the net present values. 5.2.2 Should the new machine be considered for acceptance? Why? 5.2.3 Calculate the Internal Rate of Return (expressed to two decimal places) if the machines have no scrap/resale value. Your answer must include two net present value calculations (using consecutive rates/percentages) and interpolation. INFORMATION Vendit Limited is looking at the possibility of investing in fifty vending machines. The machines would cost R800 000, and its cash operating expenses would total R510 000 per year. The machines are expected to have a useful life of five years. At the end of five years, the machines would be sold for R160 000. On the benefit side, it is estimated that the machines would generate cash revenues of R760 000 per year. The cost of capital is 15%.

5.2 REQUIRED Study the information provided below and answer the following questions. Ignore taxes. 5.2.1 Compute the Net Present Value. Your answer must include the calculations of the present values as well as the net present values. 5.2.2 Should the new machine be considered for acceptance? Why? 5.2.3 Calculate the Internal Rate of Return (expressed to two decimal places) if the machines have no scrap/resale value. Your answer must include two net present value calculations (using consecutive rates/percentages) and interpolation. INFORMATION Vendit Limited is looking at the possibility of investing in fifty vending machines. The machines would cost R800 000, and its cash operating expenses would total R510 000 per year. The machines are expected to have a useful life of five years. At the end of five years, the machines would be sold for R160 000. On the benefit side, it is estimated that the machines would generate cash revenues of R760 000 per year. The cost of capital is 15%.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 4MC: You are explaining time value of money factors to your friend. Which factor would you explain as...

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