FIN3701 Assignment 1 (COMPLETE ANSWERS) Semester 2 2024 (232195) - DUE 20 August 2024
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FIN3701 Assignment 1 Semester 2
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University Of South Africa
FIN3701 Assignment 1 (COMPLETE ANSWERS) Semester 2 2024 (232195) - DUE 20 August 2024 ; 100% TRUSTED Complete, trusted solutions and explanations. For assistance, Whats-App
QUESTION 1 [20 marks] Batlokwa Industries wishes to select one of three possible machines, each of which is expected to s...
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Semester 2 2024 (232195) - DUE 20 August 2024 ;
100% TRUSTED Complete, trusted solutions and
explanations. For assistance, Whats-
QUESTION 1 [20 marks]
Batlokwa Industries wishes to select one of three possible
machines, each of which is expected to satisfy the firm’s ongoing
need for additional aluminium extrusion capacity. The three
machines, A, B and C, are equally risky. The firm plans to use a
12% cost of capital to evaluate each of them. The initial
investment and annual cash inflows over the life of each machine
are shown in the following table: Year Machine A Machine B
Machine C 0 (R92 000) (R65 000) (R100 500) 1 R12 000 R10
000 R30 000 2 R12 000 R20 000 R30 000 3 R12 000 R30 000
R30 000 4 R12 000 R40 000 R13 000 5 R12 000 - R30 000 6
R12 000 - REQUIRED: 1.1 Calculate the NPV for each of the
three projects. (9 marks) 1.2 Calculate the annualised net present
value (ANPV) of each machine. (9 marks) 1.3 Based on the NPV
and IRR calculated above, would you advise Batlokwa (Pty) Ltd to
invest their funds in the replacement? Give a reason for your
answer. (2 marks) THERE ARE TWO COMPULSORY
ASSIGNMENTS FOR THE SECOND SEMESTER. The purpose
of this assignment is to evaluate your knowledge of the
fundamental aspects of decision-making for long-term investment.
Study chapters 9, 10, 11 and 12 in the prescribed book as well as
the relevant learning units to complete this assessment. 11
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