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Vivo Limited plans to expand operation by purchasing new machinery. The machinery will cost R1600000...

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Finance

Vivo Limited plans to expand operation by purchasing new machinery. The machinery will cost R1600000 and a further R80000 will be spent on transport and installation of the machine. The machine will have a useful life of five years. The machine will be depreciated on a straight-line basis over its useful life down to a Iil value. Working capital is expected to increase by R160000 as a result of the acquisition.
The earnings before interest and taxes (EBIT) of the new machine is as follows:
\table[[Year,\table[[Earnings before],[interest and taxes],[(EBIT)]]],[1,R300000
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