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REQUIRED Use the information provided below to calculate the following: 5.1.1 Payback Period (expressed...

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Accounting

REQUIRED
Use the information provided below to calculate the following:
5.1.1
Payback Period (expressed in years, months and days)
(3 marks)
5.1.2
Accounting Rate of Return on initial investment (expressed to two decimal places)
(4 marks)
5.1.3
Internal Rate of Return (expressed to two decimal places). Your answer must include two NPV calculations (using consecutive rates/percentages) and interpolation.
(6 marks)
INFORMATION
Gillette Manufacturers intends investing in a machine. The following details relate to this machine:
Purchase price
R800000
Expected useful life
4 years
Scrap value
R40000
Minimum required rate of return
15%
Expected net profit:
1st year
R60000
2nd year
R80000
3rd year
R110000
4th year
R120000
Depreciation is calculated using the straight-line method. Ignore taxes.

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