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FIN3701 EXAM PACK

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2023/2024 Written for academic year
Institution Chamberlain College Of Nursng
Course Fin3701
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FIN3701 EXAM PACK 2022 The InvigilatorDay of the assessment instructions:oPlease remember to keep your cell phone fully charged for the duration of theassessment.oPlease log intoThe Invigilator Appif you have not done so yet. You need to beconnected to the internet in order to log in.oScan the QR code below once the examination starts. If you encounter any difficultieswhen scanning the QR code, you can also enter the QR access code as indicated atthe bottom of the QR code to start the online invigilation. Please ensure that you areconnected to the internet if you need to enter the QR access code at the bottom of theQR code.oOnce the QR code is scanned, avoid any disturbances by putting your phone on airplanemode if possible. No internet connection is needed during the assessment.oKeep theInvigilatorAppopen at all times on your cell phone during the assessment.oYou may place your cell phone next to you. Your cell phone does not need to face youbut should however be close enough for you to hear the notifications fromTheInvigilator App.oThe Invigilator Appwill notify you when an action is required. In order to receivenotifications, do not put your cell phone on silent mode and ensure that the mediavolume is turned up.oWhen an action is required, a notification beep will be heard, and an instruction will bevisible for you to act promptly.oPlease take note that once the examination time is over, firstly focus on scanning anduploading your script to your assessment platforms. Uploading your script is timesensitive

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FIN3701
EXAM
PACK 2023

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Page 4 of 31
FIN3701

CONFIDENTIAL MAY/JUNE 2022



QUESTION 1 [10 marks]

GoldStar Construction Ltd seeks to replace a grinding machine purchased two years ago for
R76 000 with a new one. The existing grinding machine has a useful life of four years and can
be sold today for R55 000 with removal costs of R4 000. The machine was being depreciated
over a four-year straight-line period.

The cost price of the new grinding machine is R80 000 and will be depreciated over its five year
useful life using a straight line method. It will have no residual value and will be worth R0 at the
end of its five year useful life. The use of the new grinding machine is expected to increase
current assets to R30 000 and current liabilities to R80 000.
GoldStar Construction is in the 40% tax bracket.

REQUIRED:

1.1 Calculate the terminal cash flow from the use of the new grinding machine. Show all
calculations. (10 marks)




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FIN3701

CONFIDENTIAL MAY/JUNE 2022




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FIN3701

CONFIDENTIAL MAY/JUNE 2022

QUESTION 2 [12 marks]

A firm with cost of capital of 10% is evaluating two mutually exclusive projects, X and Y. The
initial investment is R350 000 for project X and R425 000 for project Y. Cash inflows
associated with the two projects are given below.

Year Project X Project Y
Cash inflows (R) Cash inflows (R)
1 140 000 175 000
2 165 000 150 000
3 190 000 125 000
4 100 000
5 75 000
6 50 000


REQUIRED:

2.1 Which project should the firm choose, based on their Annualised NPVs? (12 marks)




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