a. a. Mr. Mwansa decided to use part of his retirement package to invest in heavy duty equipment for solar power project. Based on the data given in Table 1, calculate the payback period using the discount rate of 12%. What advice would you give to Mr. Zulu if he intends to purchase similar equipment using a bank loan with a maximum repayment period of 36 months? Table 1: Details of the costs Details Cost of Purchase of equipment Cost of fuel and maintenance Income earned from hiring out the equipment 2019 470,000 2020 2021 15,500 2022 15,500 17,000 18,000 160,960 190,000 210,000 220,000 2023 2024 20,000 2025 22,000 240,000 260,000 2026 25,000 20 280,000

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Question 3
a. Mr. Mwansa decided to use part of his retirement package to invest in heavy duty equipment for
solar power project. Based on the data given in Table 1, calculate the payback period using the
discount rate of 12%.
a.
What advice would you give to Mr. Zulu if he intends to purchase similar equipment using a bank
loan with a maximum repayment period of 36 months?
Table 1: Details of the costs
Details
Cost of Purchase of
equipment
Cost of fuel and
maintenance
Income earned from hiring
out the equipment
2019
470,000
2020
15,500
2021
2022
15,500 17,000
160,960 190,000 210,000
2023
18,000
220,000
2024
20,000
240,000
2025
22,000
260,000
hig
h
2026
25,000
G
S
280,000
Transcribed Image Text:Question 3 a. Mr. Mwansa decided to use part of his retirement package to invest in heavy duty equipment for solar power project. Based on the data given in Table 1, calculate the payback period using the discount rate of 12%. a. What advice would you give to Mr. Zulu if he intends to purchase similar equipment using a bank loan with a maximum repayment period of 36 months? Table 1: Details of the costs Details Cost of Purchase of equipment Cost of fuel and maintenance Income earned from hiring out the equipment 2019 470,000 2020 15,500 2021 2022 15,500 17,000 160,960 190,000 210,000 2023 18,000 220,000 2024 20,000 240,000 2025 22,000 260,000 hig h 2026 25,000 G S 280,000
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