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
For assistance whatsapp +254702715801
, 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
For assistance whatsapp +254702715801
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
For assistance whatsapp +254702715801
, 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
For assistance whatsapp +254702715801
