(a)[4]
Distinguish how the payback method of investment appraisal differs from the net present value method.
(b)[8]
Calculate the forecast net cash flows for each year for the replacement machine.
(c)[2]
Calculate the payback period of the replacement machine.
(d)[6]
Calculate the net present value for the replacement machine. Assume that revenues are collected and costs are settled at the end of each year.
(e(i))[3]
Analyse the benefits to the business of buying the replacement machine.
(e(ii))[2]
Recommend whether the managers of Artem Limited should buy the replacement machine or not. Justify your answer.