Assignment 01 – Semester 1
Due date: 22 MARCH 2024
Unique number: 621003
Module code: FIN3701
QUESTION 1
1.1
Year Incremental Cash Flow
0 -1 666 000
1 986000 – 895 000 = 91 000
2 986000 – 881000 = 105 000
3 986000 – 819 000 = 167 000
4 986000 – 805 000 = 181 000
4 986000 – 791 000 + 254 000 = 449 000
1.2
CF0 = -1 666 000
CF1 = 91 000
CF2 = 105 000
CF3 = 167 000
CF4 = 181 000
CF5 = 449 000
I/YR = 15%
NPV = -1 070 949.58
IRR = - 12.39%
1.3
I would not advise Kaufold Ltd to invest their funds in the replacement, because the NPV is negative and the IRR
is less than the cost of capital.
Due date: 22 MARCH 2024
Unique number: 621003
Module code: FIN3701
QUESTION 1
1.1
Year Incremental Cash Flow
0 -1 666 000
1 986000 – 895 000 = 91 000
2 986000 – 881000 = 105 000
3 986000 – 819 000 = 167 000
4 986000 – 805 000 = 181 000
4 986000 – 791 000 + 254 000 = 449 000
1.2
CF0 = -1 666 000
CF1 = 91 000
CF2 = 105 000
CF3 = 167 000
CF4 = 181 000
CF5 = 449 000
I/YR = 15%
NPV = -1 070 949.58
IRR = - 12.39%
1.3
I would not advise Kaufold Ltd to invest their funds in the replacement, because the NPV is negative and the IRR
is less than the cost of capital.
