CIV3701 Assignment 1 (COMPLETE ANSWERS) Semester 2 2024 - DUE 25 August 2024

CIV3701

Assignment 1

(COMPLETE

ANSWERS)

Semester 2 2024 -

DUE 25 August

2024

,FIN3701 Assignment 1 (COMPLETE

ANSWERS) Semester 2 2024 (232195) - DUE

20 August 2024

QUESTION 1 [20 marks] Batlokwa Industries wishes

to select one of three possible machines, each of

which is expected to satisfy the firm’s ongoing need

for additional aluminium extrusion capacity. The three

machines, A, B and C, are equally risky. The firm

plans to use a 12% cost of capital to evaluate each of

them. The initial investment and annual cash inflows

over the life of each machine are shown in the

following table: Year Machine A Machine B Machine C

0 (R92 000) (R65 000) (R100 500) 1 R12 000 R10

000 R30 000 2 R12 000 R20 000 R30 000 3 R12 000


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, R30 000 R30 000 4 R12 000 R40 000 R13 000 5 R12

000 - R30 000 6 R12 000 - REQUIRED: 1.1 Calculate

the NPV for each of the three projects. (9 marks) 1.2

Calculate the annualised net present value (ANPV) of

each machine. (9 marks) 1.3 Based on the NPV and

IRR calculated above, would you advise Batlokwa

(Pty) Ltd to invest their funds in the replacement?

Give a reason for your answer. (2 marks) THERE

ARE TWO COMPULSORY ASSIGNMENTS FOR

THE SECOND SEMESTER. The purpose of this

assignment is to evaluate your knowledge of the

fundamental aspects of decision-making for long-term

investment. Study chapters 9, 10, 11 and 12 in the




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