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Questions 24 and 25 refer to the problem below. A businessman is contemplating...

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Accounting

Questions 24 and 25 refer to the problem below.
A businessman is contemplating purchasing a company for R950000. The company is expected to operate for 3 years, and the following profits are expected:
\table[[YEAR,PROFIT (R),DISCOUNT FACTOR,PRESENT VALUE (R)],[1,450000,0.909,409050],[2,740000,J,611240],[3,890000,0.751,668390],[S,,,D]]
A company of this type is expected to return a yearly profit of 10%.
QUESTION 24
(4 Marks)
The missing values J and D, respectively, are:
a.0.826 and 1688680
.0.859 and 1688680
c.0.826 and 1563290
D.0.793 and 1688680
QUESTION 25
(4 Marks)
What should be the final decision?
A. Do not buy the company since there is a nett loss of R738680
B. Buy the company since there is a nett profit of R648680
c. Buy the company since there is a nett profit of R738680
D. Do not buy the company since there is a nett loss of R648680
END OF PAPER
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