Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. 1.2 calculate the accounting rate of return (on av

1.2 Calculate the Accounting Rate of Return (on average investment) of Machine A.(6 Marks) ...

60.1K

Verified Solution

Question

Accounting

1.2 Calculate the Accounting Rate of Return (on average investment) of Machine A.(6 Marks)
1.3 Name one advantage of using net present value as a capital investment appraisal technique. (2 Marks)
1.4 Calculate the Net Present Value of each machine. (Round off amounts to the nearest Rand.)(6 Marks)
1.5 Calculate the Internal Rate of Return of Machine B.(5 Marks)
INFORMATION
Vierra Limited intends purchasing a new machine and has a choice between the following two
machines:
Machine A Machine B
Initial cost R200000 R200000
Expected useful life 5 years 5 years
Scrap value 00
Expected annual profit: R R
End of: Year 1
Year 2
Year 3
Year 4
Year 5
10000
20000
25000
35000
0
18000
18000
18000
18000
18000
The company estimates that its cost of capital is 12%.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students