MAC2602 Assignment 1 (COMPLETE ANSWERS) Semester 1 2026 - DUE 15 April 2026; 100% Correct solutions and explanations.

MAC2602 Assignment 1 (COMPLETE ANSWERS) Semester 1 2026 - DUE 15 April 2026; 100% Correct solutions and explanations. Take note of the following: • This Assessment consists of 8 pages in total (including this and other instruction pages) • This assessment consists of one question with four parts: Part A, Part B, Part C, and Part D. Each part must be answered independently. • For each Part below, you must: Clearly show all the formulas used. Clearly show all your detailed calculations (marks are awarded for calculations). Where necessary, indicate the irrelevant amounts/ adjustments with an R0 (nil-value). Round percentages to two decimal places and final answers to the nearest rand. • All questions must be answered. • Each part attempted must commence on a new (separate) page. • Include (write/type) your student number in the document/answer file. • SUBMIT THIS ASSESSMENT ONLY ONLINE VIA myModule. • Ensure that your assessment has been submitted successfully online. Keep a screenshot of your submission page as proof of your online submission. • This assessment weighs 75% in the calculation of your year mark. Refer to TL101 section 9.1.1. • Study all the study material in Lessons 0 to 7 before answering the assessment. • We suggest that you complete the assessment within the prescribed time limit of two hours. Practising proper time management when attempting to answer questions is always a good idea. This will ensure optimum examination preparation. • This assessment must be submitted strictly on or before the due date. The assessment submission platform closes automatically at the due date and time; you will therefore not be able to submit after the due date and time. • It is impossible to submit/resubmit your assessment after the due date, and students who do not submit this compulsory assessment on or before the due date will receive a 0% mark. • You are strongly urged to submit your assessment well before the due date to avoid the possibility of technical issues due to high online traffic volumes. • DO NOT send your assessment to the MAC2602 e-mail address. Assessments are only marked online via the myModule platform; therefore, e-mailed assessments will not be marked. • In the unlikely event that you experience technical issues, you must immediately notify the lecturers via e-mail at [TURN OVER] • Refer to section 10 in Tutorial Letter 101. You are reminded that your assessment must be your own work. Using artificial intelligence (AI) is prohibited and deemed academic dishonesty. You will receive 0% for your whole assessment if it is deemed that academic dishonesty has been committed in any part of the assessment, and you may be subjected to disciplinary proceedings by the University. Ensure you are familiar with the information contained in the following link: PROPOSED TIMETABLE Marks Minutes QUESTION 1: TOPICS Part A: Capital investments & capital budgeting techniques 38 46 Part B: Analysis of financial information 22 26 Part C: Capital structure and the cost of capital and discussion 24 29 Part D: Analysing and managing working capital QUESTION 1 (100 Marks; 120 Minutes) PART A (38 marks; 46 minutes) KT Beverages Ltd (“KT”) manufactures and distributes Kombucha (a naturally fermented green tea drink) in several variants and other locally known organic juices from its Polokwane Facility, in the Limpopo Province. The province has a high unemployment rate and low household income. All these products are packaged and sold in plastic bottles. The drinks are currently distributed to local wholesalers, supermarkets, and spaza shops (40% of sales are on credit), mainly in the Limpopo Province. The local municipality has faced chronic water supply challenges over the years, which have negatively impacted KT’s manufacturing processes. As part of its CAPEX budget for the 2026 financial year, the company is considering investing in a plastic bottle manufacturing facility. The investment will reduce the overreliance on the main packaging bottles supplier, based in China. The following information has so far been gathered as part of the evaluation of the investment: 1. All the cash flows (including all the relevant taxes) occur at the end of the related financial year, except for the initial capital outlay, which occurs at the beginning of the year. 2. The facility will be built on an unused piece of land that is located adjacent to the existing drink manufacturing facility. KT purchased this land for R1 000 000 in 2020, and it can now be sold for R2 000 000. 3. In line with the requirements of the environmental laws, KT must conduct an environmental assessment study before commencing with the building of the facility, at a total cost of R150 000. If relevant, these costs are not capitalised. 4. The facility will be built at a total cost of R, of which R9 000 000 relates to the manufacturing machines. This cost includes the purchase price of machinery, as well as the associated installation costs (if relevant, these costs are capitalised). The cost will be financed solely by a long-term loan at an annual interest rate of 10%. The capital amount is repayable annually in arrears (together with the related interest expense) over five years. 5. The facility must comply with the ISO requirements before plastic manufacturing can commence, at a cost of R200 000. If relevant, these costs are not capitalised. 6. The related investment in working capital is estimated at R500 000 in Year 1 and R600 000 in Year 2. There will be no investment in working capital in Year 3. 7. It is estimated that the facility will generate operating profit before interest and depreciation of R in Year 1; R in Year 2; and R in Year 3. 8. The manufacturing machines will be sold at the end of Year 3 at an estimated selling price of R7 000 000. Depreciation is provided on a straight-line basis at a rate of 5% per annum. The South African Revenue Service will grant wear-and-tear allowances of 210% per annum on the manufacturing machines. 9. The current company taxation rate is 27%. It is expected to remain the same for the entire duration of the project. 10. The minimum required after-tax return of capital projects of this nature is 12%. PART A REQUIRED: PART A Ignore the information in Parts B, C and D. (A1) Identify and briefly discuss eight economic, social, environmental, and governance factors that can affect the operations of KT, which are evident from the information given in the scenario. (16) (A2) From a quantitative perspective only, recommend whether KTZ should invest in the