Calculate accounting rate of return on average investment

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Reference no: EM132497451

Medico limited intends investing in a project during march 2021. The project is expected to cost R2500 000 with a 5 year useful life, and no residual value. The annual volume of production for the project is estimated at 150 000 units, which can be sold for cash at R12 per unit Depreciation is expected to be R500 000 per year. Annual cash operating costs are as follows:

Variable costs R225 000

Fixed costs R750 000

Calculate:

Question 1: Net Present value

Question 2: Accounting Rate of Return on average investment (answer expressed in two decimal places)

Question 3: Internal Rate of Return if the net cash flows are R720 000 per year for 5 years

Reference no: EM132497451

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