QUESTION 2INFORMATION:Vista Limited intends purchasing a new machine and has a choice between the following two machines:Equipment AEquipment BInitial costR220 000R240 000Expected useful lifeScrap valueExpected net cash inflows:5 years5 yearsNilNilEnd of:Year 155 00070 000Year 260 00070 000Year 362 00070 000Year 460 00070 000Year 570 00070 000The company estimates that its cost of capital is 12%.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 mustbe expressed to 2 decimal places).2.3 Calculate the Net Present Value of each equipment. (Round off amounts to the nearest Rand.)2.4 Calculate the Internal Rate of Return of Equipment B.

Initial Cost of equipment A = R220,000 Initial Cost of equipment B = R240,000 Expected life = 5…

Answered: Vista Limited intends purchasing a new…

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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