MAC3702
Assignment 2 Semester 1 2025
Detailed Solutions, References & Explanations
Unique number: 653816
Due Date: 23 April7 2025
QUESTION 1
a. Internal Rate of Return (IRR)
Initial Outflow (Year 0):
Lease deposit (6 months of R375,000/year): R187,500
Drilling + filtration system (30m × R10,000): R800,000
Total = R987,500 (cash outflow)
Annual cashflows
Year Year 1 Year 2 Year 3 Year 4
Water Cost Saving R1,500,000 R1,500,000 R1,500,000 R1,500,000
600,000 KL/year×R2.50
Terms of use
By making use of this document you agree to:
Use this document as a guide for learning, comparison and reference purpose,
Terms of use
Not to duplicate, reproduce and/or misrepresent the contents of this document as your own work,
By making use of this document you agree to:
Use this document
Fully accept the consequences
solely as a guide forshould you plagiarise
learning, reference,or and
misuse this document.
comparison purposes,
Ensure originality of your own work, and fully accept the consequences should you plagiarise or misuse this document.
Comply with all relevant standards, guidelines, regulations, and legislation governing academic and written work.
Disclaimer
Great care has been taken in the preparation of this document; however, the contents are provided "as is" without any express or
implied representations or warranties. The author accepts no responsibility or liability for any actions taken based on the
information contained within this document. This document is intended solely for comparison, research, and reference purposes.
Reproduction, resale, or transmission of any part of this document, in any form or by any means, is strictly prohibited.
, +27 67 171 1739
QUESTION 1
a. Internal Rate of Return (IRR)
Initial Outflow (Year 0):
Lease deposit (6 months of R375,000/year): R187,500
Drilling + filtration system (30m × R10,000): R800,000
Total = R987,500 (cash outflow)
Annual cashflows
Year Year 1 Year 2 Year 3 Year 4
Water Cost Saving R1,500,000 R1,500,000 R1,500,000 R1,500,000
600,000 KL/year×R2.50
Operating Costs
Electricity 50,000 KL × 12 × R0.8 R480,000 R480,000 R480,000 R480,000
Maintenance R12,000 R12,000 R12,000 R12,000
Labour R50,000 R50,000 R50,000 R50,000
Lease R375,000 R375,000 R375,000 R375,000
EBIT R583,000 R583,000 R583,000 R583,000
Depreciation R800,000 ÷ 3 R266,666.67 R266,666.67 R266,666.67 R0
years)
Taxable Income R316,333.33 R316,333.33 R316,333.33 R583,000
Tax @ 27% R85,410 R85,410 R85,410 R157,410
Net Income (After Tax) R497,590 R497,590 R497,590 R425,590
Add Back Depreciation R266,666.67 R266,666.67 R266,666.67 R0
Residual Value R0 R0 R0 R150,000
Lease Deposit Refund R0 R0 R0 R187,500
Net Cash Flow R764,256.67 R764,256.67 R764,256.67 R763,090
Disclaimer
Great care has been taken in the preparation of this document; however, the contents are provided "as is"
without any express or implied representations or warranties. The author accepts no responsibility or
liability for any actions taken based on the information contained within this document. This document is
intended solely for comparison, research, and reference purposes. Reproduction, resale, or transmission
of any part of this document, in any form or by any means, is strictly prohibited.
Assignment 2 Semester 1 2025
Detailed Solutions, References & Explanations
Unique number: 653816
Due Date: 23 April7 2025
QUESTION 1
a. Internal Rate of Return (IRR)
Initial Outflow (Year 0):
Lease deposit (6 months of R375,000/year): R187,500
Drilling + filtration system (30m × R10,000): R800,000
Total = R987,500 (cash outflow)
Annual cashflows
Year Year 1 Year 2 Year 3 Year 4
Water Cost Saving R1,500,000 R1,500,000 R1,500,000 R1,500,000
600,000 KL/year×R2.50
Terms of use
By making use of this document you agree to:
Use this document as a guide for learning, comparison and reference purpose,
Terms of use
Not to duplicate, reproduce and/or misrepresent the contents of this document as your own work,
By making use of this document you agree to:
Use this document
Fully accept the consequences
solely as a guide forshould you plagiarise
learning, reference,or and
misuse this document.
comparison purposes,
Ensure originality of your own work, and fully accept the consequences should you plagiarise or misuse this document.
Comply with all relevant standards, guidelines, regulations, and legislation governing academic and written work.
Disclaimer
Great care has been taken in the preparation of this document; however, the contents are provided "as is" without any express or
implied representations or warranties. The author accepts no responsibility or liability for any actions taken based on the
information contained within this document. This document is intended solely for comparison, research, and reference purposes.
Reproduction, resale, or transmission of any part of this document, in any form or by any means, is strictly prohibited.
, +27 67 171 1739
QUESTION 1
a. Internal Rate of Return (IRR)
Initial Outflow (Year 0):
Lease deposit (6 months of R375,000/year): R187,500
Drilling + filtration system (30m × R10,000): R800,000
Total = R987,500 (cash outflow)
Annual cashflows
Year Year 1 Year 2 Year 3 Year 4
Water Cost Saving R1,500,000 R1,500,000 R1,500,000 R1,500,000
600,000 KL/year×R2.50
Operating Costs
Electricity 50,000 KL × 12 × R0.8 R480,000 R480,000 R480,000 R480,000
Maintenance R12,000 R12,000 R12,000 R12,000
Labour R50,000 R50,000 R50,000 R50,000
Lease R375,000 R375,000 R375,000 R375,000
EBIT R583,000 R583,000 R583,000 R583,000
Depreciation R800,000 ÷ 3 R266,666.67 R266,666.67 R266,666.67 R0
years)
Taxable Income R316,333.33 R316,333.33 R316,333.33 R583,000
Tax @ 27% R85,410 R85,410 R85,410 R157,410
Net Income (After Tax) R497,590 R497,590 R497,590 R425,590
Add Back Depreciation R266,666.67 R266,666.67 R266,666.67 R0
Residual Value R0 R0 R0 R150,000
Lease Deposit Refund R0 R0 R0 R187,500
Net Cash Flow R764,256.67 R764,256.67 R764,256.67 R763,090
Disclaimer
Great care has been taken in the preparation of this document; however, the contents are provided "as is"
without any express or implied representations or warranties. The author accepts no responsibility or
liability for any actions taken based on the information contained within this document. This document is
intended solely for comparison, research, and reference purposes. Reproduction, resale, or transmission
of any part of this document, in any form or by any means, is strictly prohibited.
