Machine A Machine B R100 000 R110 000 Initial cost 5 years 5 years Expected economic life R10 000 0. Expected disposal/residual value R. R Expected net cash inflows 34 000 33 000 End of: Year 1 27 000 33 000 Year 2 Year 3 32 000 33 000 Year 4 30 000 33 000 Year 5 26 000 33 000 Depreciation per year 18 000 22 000 The company estimates that its cost of capital is 14%. Calculate the payback period for Machine A and B (answers must be expressed in years, and days). 2.1 2.2 Calculate the accounting rate of return (on average investment) for Machine A. (answer roun to 2 decimal places).
Machine A Machine B R100 000 R110 000 Initial cost 5 years 5 years Expected economic life R10 000 0. Expected disposal/residual value R. R Expected net cash inflows 34 000 33 000 End of: Year 1 27 000 33 000 Year 2 Year 3 32 000 33 000 Year 4 30 000 33 000 Year 5 26 000 33 000 Depreciation per year 18 000 22 000 The company estimates that its cost of capital is 14%. Calculate the payback period for Machine A and B (answers must be expressed in years, and days). 2.1 2.2 Calculate the accounting rate of return (on average investment) for Machine A. (answer roun to 2 decimal places).
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:Machine B
Machine A
R100 000
R110 000
Initial cost
5 years
5 years
Expected economic life
R10 000
0.
Expected disposal/residual value
R
R
Expected net cash inflows
34 000
33 000
End of: Year 1
27 000
33 000
Year 2
Year 3
32 000
33 000
Year 4
30 000
33 000
Year 5
26 000
33 000
Depreciation per year
18 000
22 000
The company estimates that its cost of capital is 14%.
Calculate the payback period for Machine A and B (answers must be expressed in years, moi
and days).
2.1
2.2
Calculate the accounting rate of return (on average investment) for Machine A. (answer roundec
to 2 decimal places).
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