100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
Previously searched by you
FIN3701 Assignment 1 (COMPLETE ANSWERS) Semester 2 2024 (232195) - DUE 20 August 2024 Course Financial Management (FIN3701) Institution University Of South Africa (Unisa) Book Principles of Managerial Finance$2.57
Add to cart
FIN3701 Assignment 1 (COMPLETE ANSWERS) Semester 2 2024 (232195) - DUE 20 August 2024 Course Financial Management (FIN3701) Institution University Of South Africa (Unisa) Book Principles of Managerial Finance
8 views 0 purchase
Course
Financial Management
Institution
University Of South Africa
Book
Principles of Managerial Finance
FIN3701 Assignment 1 (COMPLETE ANSWERS) Semester 2 2024 (232195) - DUE 20 August 2024
Course
Financial Management (FIN3701)
Institution
University Of South Africa (Unisa)
Book
Principles of Managerial Finance
FIN3701 Assignment 1 (CFIN3701 Assignment 1 (COMPLETE ANSWERS) Semester 2 2024 (232195) - DUE 20 August 2024OMPLETE ANSWERS) Semester 2 2024 (232195) - DUE 20 August 2024
FIN3701 Assignment 1 (COMPLETE ANSWERS) Semester 2 2024 - DUE 20 August 2024 ; 100% TRUSTED Complete, trusted solutions and explanations.
FIN3701 Assignment 1 (COMPLETE ANSWERS) Semester 2 2024 (232195) - DUE 20 August 2024 ; 100% TRUSTED Complete, trusted solutions and explanations.
All for this textbook (18)
Written for
University of South Africa
Financial Management
All documents for this subject (75)
Seller
Follow
Jennifer2024
Reviews received
Content preview
FIN3701 Assignment 1
(COMPLETE ANSWERS)
Semester 2 2024 (232195) -
DUE 20 August 2024 ; 100%
TRUSTED
ADMIN
[COMPANY NAME]
,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
To tackle this problem, we need to follow these steps for each
machine:
1. Calculate the Net Present Value (NPV):
NPV=∑(Ct(1+r)t)−C0\text{NPV} = \sum \left(
\frac{C_t}{(1 + r)^t} \right) - C_0NPV=∑((1+r)tCt)−C0
, where CtC_tCt is the cash inflow at year ttt, rrr is the
discount rate (12%), and C0C_0C0 is the initial investment.
2. Calculate the Annualised Net Present Value (ANPV):
ANPV=NPVPVIFA(r,n)\text{ANPV} =
\frac{\text{NPV}}{\text{PVIFA}(r,
n)}ANPV=PVIFA(r,n)NPV
where PVIFA(r,n)\text{PVIFA}(r, n)PVIFA(r,n) is the
present value interest factor of an annuity, calculated as:
PVIFA(r,n)=1−(1+r)−nr\text{PVIFA}(r, n) = \frac{1 - (1 +
r)^{-n}}{r}PVIFA(r,n)=r1−(1+r)−n
nnn is the number of years the machine is in operation.
3. Compare NPV and IRR for decision making.
1.1 Calculate the NPV for each machine
Machine A:
NPVA=12,000(1+0.12)1+12,000(1+0.12)2+12,000(1+0.12)3+12,
000(1+0.12)4+12,000(1+0.12)5+12,000(1+0.12)6−92,000=12,000
1.12+12,0001.2544+12,0001.4049+12,0001.5735+12,0001.7623+
12,0001.9743−92,000=10,714.29+9,567.01+8,541.21+7,628.76+6
,812.14+6,087.67−92,000=49,351.08−92,000=−42,648.92\begin{
aligned} \text{NPV}_A &= \frac{12,000}{(1 + 0.12)^1} +
\frac{12,000}{(1 + 0.12)^2} + \frac{12,000}{(1 + 0.12)^3} +
\frac{12,000}{(1 + 0.12)^4} + \frac{12,000}{(1 + 0.12)^5} +
\frac{12,000}{(1 + 0.12)^6} - 92,000 \\ &= \frac{12,000}{1.12}
+ \frac{12,000}{1.2544} + \frac{12,000}{1.4049} +
\frac{12,000}{1.5735} + \frac{12,000}{1.7623} +
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 Jennifer2024. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $2.57. You're not tied to anything after your purchase.
