FIN4801 Assignment 4 2025 - Due 8 August 2025 | 100% satisfaction guarantee

Advanced Financial Management - FIN4801 Assignment 4 2025 - Due 8 August 2025; 100 % TRUSTED workings, Expert Solved, Explanations and Solutions. For assistance call or W.h.a.t.s.a.p.p us on ...(.+.2.5.4.7.7.9.5.4.0.1.3.2)........... FIN4801 Instructions Assignment 4 • Turn It In is enabled for this assignment – ensure that you submit early so that you can check your report. You had an opportunity with assignment 2 to see how Turn It In works, in this assignment, we will send our warning letters where possible dishonesty is detected. • This is an individual assignment. • Please type your answers • If you use other sources or quote directly from the textbook, please cite such instances. • Attempt the assignment yourself, do not us an AI agent to complete the assignment for you. • Show your steps to your calculations clearly and label your calculations. Question 1 (20 Marks) Mapex Ltd., a geoinformatics company is expanding into drone manufacturing to diversify its operations. This project has an initial life of 4 years and the initial costs of the machinery (which is the only significant initial cost) is R800 000 while the related installation costs is R200 000. The projects are expected to generate sales of R1 500 000 each year (expressed in real terms). Variable costs are expected to amount to 60% of sales while fixed costs are expected to be R200 000 (in real terms). The machinery for the project can be depreciated over 4 years and the tax rate is 27%. The machinery can be sold for R1 200 000 at the end of the project (in nominal terms). The company is wholly financed by equity. The risk-free rate is 10% and the market risk premium is 5%. The company currently has a beta of 1.5 while that of the drone industry is 1.5. Inflation is 4%. Required: Adjust the cash flows for inflation where necessary and identify the relevant cash flows of the project Determine the most appropriate discount rate to use for the project (12) (3) Discuss the acceptability of the project, mention how you adjusted for inflation and risk and what impact this had on the resultant NPV. (5)