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Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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
Transcribed Image Text:5.3
REQUIRED
Use the information given below to answer the following questions
5.3.1
Calculate the Internal Rate of Retum (expressed to two decimal places). Your
answer must include two net present value calculations (using consecutive cost
of capital rates) and interpolation.
(6 marks)
5.3.2 Based on the IRR should the company consider purchasing the machine? Why? (1 mark)
INFORMATION
Venus Limited is investigating an opportunity to purchase a machine for R640 000. The machine is
Opera
expected generate net cash flows of R180 000 per annum for five years. The company's cast of capital
is 16%
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