The cost of this additional machinery has been deducted in arriving at the profit projections for R for year 3.

                 I.           The cost of this additional machinery has been deducted in arriving at the profit projections for R for year 3. It is projected that it will last for three years and have a nil scrap value.

                            II.           The company's policy is to depreciate its assets on a straight line basis.

                          III.           The discount rate to be used by the company is 14%.