Question 3 [36]
Rapid Print CC is a company specialising in 3D printing forcommerce and industry. The management committee is consideringadding an additional 3D printer to its production facilities and isconsidering purchasing one of two suitable 3D printers availablefor their purposes. Both printers, LaserX and 3Dpro, are underconsideration. The printing manager and the financial manager canexpect a minimum return of 10% per annum from either printer. Theacquisition price for LaserX is R350 000 and for 3Dpro it is R600000. They have also prepared the following expected net cash flowsfor the expected 4-year life span of the two printers:
LaserX 3Dpro
80000 150 000
100000 250 000
150000 275 000
180000 300 000
Required
Show all calculations.
3.1. Calculate the net present value (NPV) for both printers andthe internal rate of return (IRR) for LaserX. The IRR for 3Dpro =20%. It is recommended that you use 22% as an alternative cost ofcapital for LaserX. (29)
3.2. Recommend to Rapid Print’s management which printer theyshould consider purchasing, providing specific reasons for yourrecommendations.
