4.1 REQUIRED Study the information provided below and answer the following questions: 4.1.1 Use...
50.1K
Verified Solution
Link Copied!
Question
Accounting
4.1 REQUIRED Study the information provided below and answer the following questions:
4.1.1 Use the Net Present Value technique to determine the machine that the company should purchase. (10 marks)
4.1.2 Calculate the Accounting Rate of Return (on initial investment) of Machine X. (4 marks)
INFORMATION
Emerald Limited has the choice of purchasing one of two machines viz. Machine X and Machine Y but funding is available to invest in only one of them (if at all). Each machine costs R10 000 000 and a useful life of five years is anticipated. The residual value of each machine is estimated to be R1 000 000. The annual volume of production for each machine is estimated to be 150 000 units, which can be sold for cash at R48 per unit. Depreciation is calculated on the machines using the straight-line method over their respective useful lives.
Annual cash operating costs are as follows: The cost of capital is expected to be 15%
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!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.