QUESTION 2 INFORMATION: vista Limited intends purchasing a new machine and has achoice setween the following two machines Equipment A Equipment Initial cost R220 000 R240 000 Eyears Expected usetul ie Srap value Expected net cuh infows years Nil End of 35 000 70 000 Year 1 Year 2 60 000 70 000 Year 3 Year4 62000 70 000 60 000 70 000 Year3 70 000 70 000 The company estimates that its cest of capital is 12 Required: 21 Calculate the Payoeck Period of both equipment. (Answers must be expressed in years, months and days 22 Calcuiate the Accounting Rate of Return (on initial investment) for both equipment A and 8. (Answers must De expressed to 2 decimal piaces) 23 Caiculate the Net Present value of each equipment. (Round oft amounts to the nearest Rand ) 24 Calculate the intemai Rate of Return of Equipment .
QUESTION 2 INFORMATION: vista Limited intends purchasing a new machine and has achoice setween the following two machines Equipment A Equipment Initial cost R220 000 R240 000 Eyears Expected usetul ie Srap value Expected net cuh infows years Nil End of 35 000 70 000 Year 1 Year 2 60 000 70 000 Year 3 Year4 62000 70 000 60 000 70 000 Year3 70 000 70 000 The company estimates that its cest of capital is 12 Required: 21 Calculate the Payoeck Period of both equipment. (Answers must be expressed in years, months and days 22 Calcuiate the Accounting Rate of Return (on initial investment) for both equipment A and 8. (Answers must De expressed to 2 decimal piaces) 23 Caiculate the Net Present value of each equipment. (Round oft amounts to the nearest Rand ) 24 Calculate the intemai Rate of Return of Equipment .
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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MANCOSA: POSTGRADUATE DIPLOMA IN BUSINESS MANAGEMENT
88
9. Other operating expenses are expected to increase by R500 every month. These expenses are paid for in the
month in which they are incurred.
10. Electricity is expected to increase by 12% from 1 August 2021 due to tarift increases
LO Export PDF
11. The balance in the bank on 30 June 2021 is estimated to be R40 000 (favourable)-
QUESTION 2
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INFORMATION:
Vista Limited intends purchasing a new machine and has a choice between the following two machines:
Equipment A
Equipment B
Initial cost
R220 000
R240 000
Create PDF
Expected usetul ite
5 years
5 years
Ni
Nil
Scrap value
Expected net cash inflows:
R
R
End of:
Comment
Year 1
55 000
70 000
Tear
Year 2
60 000
70 000
Year 3
62 000
70 000
Year 4
60 000
70 000
A Combine Files
Year5
O D00
70 000
70 000
The company estimates that its cost of capital is 12%.
E0 Organize Pages
Required:
2.1 Calculate the Payback Period of both equipment. (Answers must be expressed in years, months and days'
2.2 Calculate the Accounting Rate of Return (on initial investment) for both equipment A and B. (Answers must
be expressed to 2 decimal places).
* Compress PDF
2.3 Calculate the Net Present Value of each equipment. (Round off amounts to the nearest Rand.)
2 Redact
2.4 Calculate the Internal Rate of Return of Equipment B
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PROGRAMME HANDBOOK: JANUARY 2021 INTAKE
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