(a(i))[3]
Calculate the payback period, in months, for the proposed investment.
(a(ii))[4]
Calculate the net present value (NPV) for the proposed investment.
(a(iii))[4]
Calculate the internal rate of return (IRR) for the proposed investment.
(b)[4]
Advise the directors whether they should buy the machine or not. Support your answer with your calculations from part (a).
(c)[6]
Comment on the directors’ decision to buy the machine once the tariff has been removed. Back up your answers with relevant calculations.
(d)[4]
Explain why the directors of W Limited use both the payback period and NPV when making their investment decisions.