Exam (elaborations)
FIN3701 EXAM PACK 2022
- Course
- Institution
FIN3701 EXAM PACK 2022
[Show more]
Seller
Follow
phennymapenzi
Reviews received
Content preview
FIN3701 EXAMPACK 2022
, Stuvia.com - The study-notes marketplace
Page 5 of 45
FIN3701
CONFIDENTIAL
OCTOBER/NOVEMBER 2022
QUESTION 1 [10 marks]
Kaufold Ltd, a large manufacturer of aircraft components, has a capital budget of R2 000 000
and is evaluating the replacement of its existing machine with the more sophisticated model.
The CFO determined the initial investment required and the terminal cash flow associated with
the replacement to be R1 666 000 and R254 000 respectively. Both the usable life of the
proposed and the remaining life of the current machine are 5 years.
Expected cash inflows relating to the investments are as follow:
Year Proposed machine Current machine
1 986 000 895 000
2 986 000 881 000
3 986 000 819 000
4 986 000 805 000
5 986 000 791 000
Kaufold Ltd’s WACC is 15% and it is taxed at 29%.
REQUIRED
1.1 Calculate the incremental cash flows relating to the replacement decision. (6 marks)
[TURN OVER]
Downloaded by: M | M
Distribution of this document is illegal
, Stuvia.com - The study-notes marketplace
Page 6 of 45
FIN3701
CONFIDENTIAL
OCTOBER/NOVEMBER 2021
[TURN OVER]
Downloaded by: M | M
Distribution of this document is illegal
, Stuvia.com - The study-notes marketplace
Page 7 of 45
FIN3701
CONFIDENTIAL
OCTOBER/NOVEMBER 2021
[TURN OVER]
Downloaded by: M | M
Distribution of this document is illegal
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller phennymapenzi. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $2.87. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
75323 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now