FIN3701 ASSIGNMENT 1 SEMESTER 2 OF 2023
For academic needs contact
Cell: 065 160 9781
, QUESTION 1
1.1 BOOK VALUE =COST –ACCUMULATED DEPRECIATION
=1 000 000 -0.2X1 000 000X3
=R4 00 000
1.2 RECOUPMENT =SELLING PRICE –TAX VALUE
=800 000-400 000
=400 000
TAX IMPLICATION =40%X400 000
=160 000 (CAPITAL GAIN TAX)
1.3 AFTER TAX PROCEEDS =SELLING PRICE –CAPITAL GAIN TAX
=400 000-160 000
=R240 000
1.4 INITIAL INVESTMENT =PURCHASE PRICE +INTALLATION COSTS
+TRANSPORTATION COSTS –PROCEEDS AFTER TAX –DECREASE IN WORKING
CAPITAL
=750 000 +20 000 + 5 000 -240 000-7 000
=R528 000
QUESTION 2
2.1 TERMINAL CASHFLOW = PROCEEDS AFTER TAX FROM SALE OF THE NEW
GRINDING MACHINE + CHANGES IN WORKING CAPITAL
Calculations
Changes in working capital= 30 000-80 000
=R50 000 (decrease)
Depreciation (80 000/5) =R16 000
Accumulated depreciation = 5X16 000 =R80 000
Tax value =Nil
Capital gain tax = Nil
Old Grinding Machine
Tax value = 76 000 – (76 000/4) x2=R38 000
Selling price =55 000 -4 000= R51 000
For academic needs contact
Cell: 065 160 9781
, QUESTION 1
1.1 BOOK VALUE =COST –ACCUMULATED DEPRECIATION
=1 000 000 -0.2X1 000 000X3
=R4 00 000
1.2 RECOUPMENT =SELLING PRICE –TAX VALUE
=800 000-400 000
=400 000
TAX IMPLICATION =40%X400 000
=160 000 (CAPITAL GAIN TAX)
1.3 AFTER TAX PROCEEDS =SELLING PRICE –CAPITAL GAIN TAX
=400 000-160 000
=R240 000
1.4 INITIAL INVESTMENT =PURCHASE PRICE +INTALLATION COSTS
+TRANSPORTATION COSTS –PROCEEDS AFTER TAX –DECREASE IN WORKING
CAPITAL
=750 000 +20 000 + 5 000 -240 000-7 000
=R528 000
QUESTION 2
2.1 TERMINAL CASHFLOW = PROCEEDS AFTER TAX FROM SALE OF THE NEW
GRINDING MACHINE + CHANGES IN WORKING CAPITAL
Calculations
Changes in working capital= 30 000-80 000
=R50 000 (decrease)
Depreciation (80 000/5) =R16 000
Accumulated depreciation = 5X16 000 =R80 000
Tax value =Nil
Capital gain tax = Nil
Old Grinding Machine
Tax value = 76 000 – (76 000/4) x2=R38 000
Selling price =55 000 -4 000= R51 000
