5.3 REQUIRED Use the information given below to answer the following questions 5.3.1 Calculate the Internal Rate of Retum (expressed to two decimal places). Your answer must include two net present value calculations (using consecutive cost of capital rates) and interpolation. (6 marks) 5.3.2 Based on the IRR should the company consider purchasing the machine? Why? (1 mark) INFORMATION Venus Limited is investigating an opportunity to purchase a machine for R640 000. The machine is Opera expected generate net cash flows of R180 000 per annum for five years. The company's cast of capital is 16%
5.3 REQUIRED Use the information given below to answer the following questions 5.3.1 Calculate the Internal Rate of Retum (expressed to two decimal places). Your answer must include two net present value calculations (using consecutive cost of capital rates) and interpolation. (6 marks) 5.3.2 Based on the IRR should the company consider purchasing the machine? Why? (1 mark) INFORMATION Venus Limited is investigating an opportunity to purchase a machine for R640 000. The machine is Opera expected generate net cash flows of R180 000 per annum for five years. The company's cast of capital is 16%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:5.3
REQUIRED
Use the information given below to answer the following questions
5.3.1
Calculate the Internal Rate of Retum (expressed to two decimal places). Your
answer must include two net present value calculations (using consecutive cost
of capital rates) and interpolation.
(6 marks)
5.3.2 Based on the IRR should the company consider purchasing the machine? Why? (1 mark)
INFORMATION
Venus Limited is investigating an opportunity to purchase a machine for R640 000. The machine is
Opera
expected generate net cash flows of R180 000 per annum for five years. The company's cast of capital
is 16%
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