Iota Solutions Details:Initial investment of R500,000 and residual value of R35,000.Cashflows and discount factors:YearCashflowsDiscount FactorYear...
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Accounting
Iota Solutions Details:
- Initial investment of R500,000 and residual value of R35,000.
- Cashflows and discount factors:
Year | Cashflows | Discount Factor |
Year 1 | R85,000 | 0.909 |
Year 2 | R140,000 | 0.826 |
Year 3 | R130,000 | 0.751 |
Year 4 | R95,000 | 0.683 |
Year 5 | R75,000 | 0.621 |
- Cost of capital: 12%
- Depreciation: R30,000 per year
- Tax rate: 28%
Required:
- Calculate each of the following: 1.1 Accounting Rate of Return 1.2 Payback period 1.3 Net Present Value (NPV) 1.4 Profitability Index (PI)
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