UNIVERSITY OF SOUTH AFRICA
College of Economic and Management Sciences
FIN3701
Financial Management
Assignment 1 – Semester 1 2026
Unique Number: 224276
Due Date: 30 March 2026
Module: FIN3701 – Financial Management
Assignment: Assignment 1
Semester: Semester 1, 2026
Unique Number: 224276
Due Date: 30 March 2026
Institution: University of South Africa (UNISA)
Submitted in partial fulfillment of the requirements of FIN3701
,UNISA | FIN3701 Financial Management – Assignment 1
Contents
1 Question 1: Bottling Ltd – Capital Budgeting Analysis 3
1.1 1.1 Initial Investment (4 marks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2 1.2 Operating Cash Inflows – Year 1 and Year 2 (10 marks) . . . . . . . . . . . . 4
1.3 1.3 Tax Effect on Terminal Cash Flow from Disposal (4 marks) . . . . . . . . . . 6
1.4 1.4 Internal Rate of Return (IRR) . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2 Question 2: Mamphela Mining Corporation – Share Valuation 10
2.1 2.1 Current Price of Mamphela Mining Corporation Ordinary Share . . . . . . . 10
2.2 2.2 Investment Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3 Question 3: Raging Volts – Weighted Average Cost of Capital 13
3.1 3.1 Component Costs of Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2 3.2 WACC, Break Points – Current Structure (80% Equity / 20% Debt) . . . . . 13
3.3 3.3 WACC, Break Points – Proposed Structure (60% Debt / 40% Equity) . . . . 14
3.4 3.4 Number of Shares – Current Structure . . . . . . . . . . . . . . . . . . . . . . 16
3.5 3.5 Number of Shares – Proposed Structure . . . . . . . . . . . . . . . . . . . . . 16
4 Question 4: Mphoreng Industries – Machine Replacement Analysis 17
4.1 4.1 Book Value of the Existing Machine . . . . . . . . . . . . . . . . . . . . . . . 17
4.2 4.2 Tax Implication from Sale of Existing Machine . . . . . . . . . . . . . . . . . 17
4.3 4.3 After-Tax Proceeds from Sale of Existing Machine . . . . . . . . . . . . . . . 18
4.4 4.4 Initial Investment for Replacement . . . . . . . . . . . . . . . . . . . . . . . . 18
5 Question 5: Projects X and Y – Risk Concepts in Capital Budgeting 19
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, UNISA | FIN3701 Financial Management – Assignment 1
5.1 5.1 NPV Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2 5.2 Project Selection with Risk Considerations . . . . . . . . . . . . . . . . . . . . 20
6 Question 6: Tyres Manufacturers – New Financing and Component Costs 21
6.1 6.1 Forms and Amounts of New Financing . . . . . . . . . . . . . . . . . . . . . . 21
6.2 6.2 Component Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7 Question 7: Evans Industries – NPV and ANPV Machine Comparison 23
7.1 7.1 NPV of Each Machine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2 7.2 Annualised NPV (ANPV) of Each Machine . . . . . . . . . . . . . . . . . . . 24
7.3 7.3 Machine Selection Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8 Question 8: Projects M and N – ANPV Comparison 26
8.1 8.1 ANPV of Project M and Project N . . . . . . . . . . . . . . . . . . . . . . . . 26
Reference List 27
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College of Economic and Management Sciences
FIN3701
Financial Management
Assignment 1 – Semester 1 2026
Unique Number: 224276
Due Date: 30 March 2026
Module: FIN3701 – Financial Management
Assignment: Assignment 1
Semester: Semester 1, 2026
Unique Number: 224276
Due Date: 30 March 2026
Institution: University of South Africa (UNISA)
Submitted in partial fulfillment of the requirements of FIN3701
,UNISA | FIN3701 Financial Management – Assignment 1
Contents
1 Question 1: Bottling Ltd – Capital Budgeting Analysis 3
1.1 1.1 Initial Investment (4 marks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2 1.2 Operating Cash Inflows – Year 1 and Year 2 (10 marks) . . . . . . . . . . . . 4
1.3 1.3 Tax Effect on Terminal Cash Flow from Disposal (4 marks) . . . . . . . . . . 6
1.4 1.4 Internal Rate of Return (IRR) . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2 Question 2: Mamphela Mining Corporation – Share Valuation 10
2.1 2.1 Current Price of Mamphela Mining Corporation Ordinary Share . . . . . . . 10
2.2 2.2 Investment Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3 Question 3: Raging Volts – Weighted Average Cost of Capital 13
3.1 3.1 Component Costs of Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2 3.2 WACC, Break Points – Current Structure (80% Equity / 20% Debt) . . . . . 13
3.3 3.3 WACC, Break Points – Proposed Structure (60% Debt / 40% Equity) . . . . 14
3.4 3.4 Number of Shares – Current Structure . . . . . . . . . . . . . . . . . . . . . . 16
3.5 3.5 Number of Shares – Proposed Structure . . . . . . . . . . . . . . . . . . . . . 16
4 Question 4: Mphoreng Industries – Machine Replacement Analysis 17
4.1 4.1 Book Value of the Existing Machine . . . . . . . . . . . . . . . . . . . . . . . 17
4.2 4.2 Tax Implication from Sale of Existing Machine . . . . . . . . . . . . . . . . . 17
4.3 4.3 After-Tax Proceeds from Sale of Existing Machine . . . . . . . . . . . . . . . 18
4.4 4.4 Initial Investment for Replacement . . . . . . . . . . . . . . . . . . . . . . . . 18
5 Question 5: Projects X and Y – Risk Concepts in Capital Budgeting 19
Page 1 of 27
, UNISA | FIN3701 Financial Management – Assignment 1
5.1 5.1 NPV Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2 5.2 Project Selection with Risk Considerations . . . . . . . . . . . . . . . . . . . . 20
6 Question 6: Tyres Manufacturers – New Financing and Component Costs 21
6.1 6.1 Forms and Amounts of New Financing . . . . . . . . . . . . . . . . . . . . . . 21
6.2 6.2 Component Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7 Question 7: Evans Industries – NPV and ANPV Machine Comparison 23
7.1 7.1 NPV of Each Machine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2 7.2 Annualised NPV (ANPV) of Each Machine . . . . . . . . . . . . . . . . . . . 24
7.3 7.3 Machine Selection Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8 Question 8: Projects M and N – ANPV Comparison 26
8.1 8.1 ANPV of Project M and Project N . . . . . . . . . . . . . . . . . . . . . . . . 26
Reference List 27
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