MAC2602 ASSESSMENT 3 – SEMESTER 2 OF
2024
QUESTION 1
1.1. d
1.2. c
1.3. a
1.4. a
1.5. d
, QUESTION 2
PART A
(a) Replacement – The brand – new truck was replacing the truck which was filled with
contaminated diesel and was damaged beyond repair;
(b) Major repair or upgrade – The expenditure was meant to restore the machine to its
previous condition by reconditioning and replacing old engine and gearbox;
(c) Expansion – Investment made to enter to expand into face recognition technology
and the investment was meant to grow the company.
PART B
(a) Environmental, Ethical, Social or Governance Factors
Failure to take care of the environment through incorrectly dumping steel and
aluminium. This can cause physical and health challenges to communities
affected and some of these problems can even be long term;
The integrity of management is questionable as indicated by the attempt to bribe
environmental officials. Management are expected to be honest in all their
personal and business dealings and should not engage in corrupt activities;
The current machine is dangerous to the environment considering that its
emissions are above the limits set on the ISO standards. This poses a risk to
health and one of the causal effects of global warming;
The integrity of the Financial Manager is questionable as he was previously
involved in money laundering.
(b) Calculation of internal rate of return
Year
0 1 2 3
R R R R
Net cash flow (6 000 000) 2 000 000 3 000 000 3 500 000
Present value factor @ 15% 1 0.870 0.756 0.658
Present value (6 000 000) 1 740 000 2 268 000 2 303 000
NPV 311 000
Net cash flow (6 000 000) 2 000 000 3 000 000 3 500 000
Present value factor @ 18% 1 0.847 0.718 0.609
Present value (6 000 000) 1 694 000 2 154 000 2 131 500
NPV (20 500)
Internal rate of return = = 17.81%
2024
QUESTION 1
1.1. d
1.2. c
1.3. a
1.4. a
1.5. d
, QUESTION 2
PART A
(a) Replacement – The brand – new truck was replacing the truck which was filled with
contaminated diesel and was damaged beyond repair;
(b) Major repair or upgrade – The expenditure was meant to restore the machine to its
previous condition by reconditioning and replacing old engine and gearbox;
(c) Expansion – Investment made to enter to expand into face recognition technology
and the investment was meant to grow the company.
PART B
(a) Environmental, Ethical, Social or Governance Factors
Failure to take care of the environment through incorrectly dumping steel and
aluminium. This can cause physical and health challenges to communities
affected and some of these problems can even be long term;
The integrity of management is questionable as indicated by the attempt to bribe
environmental officials. Management are expected to be honest in all their
personal and business dealings and should not engage in corrupt activities;
The current machine is dangerous to the environment considering that its
emissions are above the limits set on the ISO standards. This poses a risk to
health and one of the causal effects of global warming;
The integrity of the Financial Manager is questionable as he was previously
involved in money laundering.
(b) Calculation of internal rate of return
Year
0 1 2 3
R R R R
Net cash flow (6 000 000) 2 000 000 3 000 000 3 500 000
Present value factor @ 15% 1 0.870 0.756 0.658
Present value (6 000 000) 1 740 000 2 268 000 2 303 000
NPV 311 000
Net cash flow (6 000 000) 2 000 000 3 000 000 3 500 000
Present value factor @ 18% 1 0.847 0.718 0.609
Present value (6 000 000) 1 694 000 2 154 000 2 131 500
NPV (20 500)
Internal rate of return = = 17.81%
