FINANCIAL MANAGEMENT
FIN3701
ASSIGNMENT 01 SEMESTER 01 2023
QUESTION 1 PREVIEW
1.1 Net present value (NPV), internal rate of return (IRR) and payback period (Pb)
for the replacement.
Initial Investment calculation
Installed cost of new machine (R8 500 000)
Proceeds from the sale of the old machine R379 200
Change in NWC (R475 000)
Initial investment (R8 595 800)
Proceeds from the sale of old equipment.
Capital Gains: R410 000 – R300 000 = R110 000
Capital gains tax: R110 000 x 0.28 = R30 800
Proceeds from sales: (Proceeds – Tax) R410 000 – R30 800 = R379 200
FIN3701
ASSIGNMENT 01 SEMESTER 01 2023
QUESTION 1 PREVIEW
1.1 Net present value (NPV), internal rate of return (IRR) and payback period (Pb)
for the replacement.
Initial Investment calculation
Installed cost of new machine (R8 500 000)
Proceeds from the sale of the old machine R379 200
Change in NWC (R475 000)
Initial investment (R8 595 800)
Proceeds from the sale of old equipment.
Capital Gains: R410 000 – R300 000 = R110 000
Capital gains tax: R110 000 x 0.28 = R30 800
Proceeds from sales: (Proceeds – Tax) R410 000 – R30 800 = R379 200
