Question 1
A new project has the following Year 0 (initial) costs associated with it:
Purchase price of machinery R2 000 000
Installation costs R500 000
Increase in NOWC requirements R100 000
What would the total initial costs (Year 0 cash flow) for the project be?
a. R600 000
b. R2 000 000
c. R2 500 000 (Purchase price + Installations costs)
d. R2 600 000
Question 2
Consider the same information as in the previous question:
A new project has the following costs associated with it:
Purchase price of machinery R2 000 000
Installation costs R500 000
Increase in NOWC requirements R100 000
What would the depreciable value of the machinery be?
a. R1 400 000
b. R1 500 000
c. R2 000 000
d. R2 500 000
, Question 3
A project has the following cash in and out flows in its first year:
Income generated: R100 000
Cost of sales R30 000
Depreciation R10 000
What would the tax payable for the first year of the project be if the tax rate is 27%?
a. R16 200
b. R17 900
c. R18 200
d. R30 000
R
Revenue 100 000
Less opearating costs
COS -30 000
Deprecitiation -10 000
EBIT 60 000
Less Interst 0
EBT 60 000
Less rax @ 28% -16 200
NOPAT 43 800
Add depreciation 10 000
Net cashflows 53 800
Question 4
Consider the same information as in the previous question again:
A project has the following cash in and out flows in its first year:
Income generated: R100 000
Cost of sales R30 000
Depreciation R10 000