T UTORING FOR
FAC,MAC,ECS,STA,DSC,TAX, FIN
,INV,QMI, BNU,MNG,MNB,BSM, CLA
whatsapp me on+27737560989
Question 1: EMAIL:
(ii) Equipment & setup should be R30m in Year 0
(iii) WC is correct
(iv) Residual should be inflow not (R4.5m)
Option c. Statement (ii) and (iii) only.
Question 2:
Reg fees escalate by CPI:
Year 1 = 1.25
Year 2 = 1.306
Year 3 = 1.365
Year 4 = 1.426
Year 5 = 1.491
Finance = R2.9m
Depreciation = R30m * 20%
Depreciation = R6m
Option d. Extract D.
Question 3:
(i) True
, (ii) False (forgone lease is an opportunity cost)
(iii) True
(iv) True
Option b. Statement (ii) only.
Question 4:
Tender costs are a sunk cost.
Option b. The director's reasoning is incorrect. The R100 000 is a sunk cost regardless
of whether the project proceeds or not.
Question 5:
IRR = 11.4%
WACC = 11.5%
IRR (11.4%) < WACC (11.5%)
Negative NPV, reject.
Option a. The manager is incorrect - since the IRR (11,4%) is below the WACC (11,5%),
the project is expected to erode TechNova's shareholder value, and the resulting Net
Present Value (NPV) would be negative. The project should be rejected.
Question 6:
(ii) Correct (liquidity is for short-term obligation-paying ability; project acceptance based
on capital budgeting principles)
(iii) Correct (project's short-term obligation ability is its own cash flow)
(i) False
(iv) False
(v) False
Option e. Statements (ii) and (iii) only.
Question 7:
Year 1 labor = R20m + R15m
Year 1 labor = R35m
Year 2 = R35m * 1.045
Year 2 = R36.575m
Option c. R36 575 000.
Question 8:
(i) Constant payout ratio (40% of 6m earnings, 14/35 = 40%, 18/45 = 40%, etc) - Correct
(iii) Residual for final dividends - Correct
(iv) Special dividends threshold - Correct
(ii) is wrong
FAC,MAC,ECS,STA,DSC,TAX, FIN
,INV,QMI, BNU,MNG,MNB,BSM, CLA
whatsapp me on+27737560989
Question 1: EMAIL:
(ii) Equipment & setup should be R30m in Year 0
(iii) WC is correct
(iv) Residual should be inflow not (R4.5m)
Option c. Statement (ii) and (iii) only.
Question 2:
Reg fees escalate by CPI:
Year 1 = 1.25
Year 2 = 1.306
Year 3 = 1.365
Year 4 = 1.426
Year 5 = 1.491
Finance = R2.9m
Depreciation = R30m * 20%
Depreciation = R6m
Option d. Extract D.
Question 3:
(i) True
, (ii) False (forgone lease is an opportunity cost)
(iii) True
(iv) True
Option b. Statement (ii) only.
Question 4:
Tender costs are a sunk cost.
Option b. The director's reasoning is incorrect. The R100 000 is a sunk cost regardless
of whether the project proceeds or not.
Question 5:
IRR = 11.4%
WACC = 11.5%
IRR (11.4%) < WACC (11.5%)
Negative NPV, reject.
Option a. The manager is incorrect - since the IRR (11,4%) is below the WACC (11,5%),
the project is expected to erode TechNova's shareholder value, and the resulting Net
Present Value (NPV) would be negative. The project should be rejected.
Question 6:
(ii) Correct (liquidity is for short-term obligation-paying ability; project acceptance based
on capital budgeting principles)
(iii) Correct (project's short-term obligation ability is its own cash flow)
(i) False
(iv) False
(v) False
Option e. Statements (ii) and (iii) only.
Question 7:
Year 1 labor = R20m + R15m
Year 1 labor = R35m
Year 2 = R35m * 1.045
Year 2 = R36.575m
Option c. R36 575 000.
Question 8:
(i) Constant payout ratio (40% of 6m earnings, 14/35 = 40%, 18/45 = 40%, etc) - Correct
(iii) Residual for final dividends - Correct
(iv) Special dividends threshold - Correct
(ii) is wrong
