FIN3704
Assignment 5
(COMPLETE
ANSWERS)
Semester 2
2024 - DUE 15
October 2024
[Type the document subtitle]
, [Pick the date]
[Type the company name]
Exam (elaborations)
FIN3704 Assignment 5 (COMPLETE ANSWERS)
Semester 2 2024 - DUE 15 October 2024
Course
Applied Financial Management (FIN3704)
Institution
University Of South Africa (Unisa)
Book
ADVANCED FINANCIAL MANAGEMENT (AFM).
FIN3704 Assignment 5 (COMPLETE ANSWERS) Semester 2 2024 - DUE 15
October 2024 ; 100% TRUSTED Complete, trusted solutions and
explanations.. Ensure your success with us..
Question 2 (20 Marks) The Port Saint John Water Park has thought about
buying a new log flume ride. The equipment costs R900 000 to purchase, and
installation costs an additional R56400. The equipment has a six-year
expected life and will be depreciated using the MACRS seven-year class life.
Management anticipates 160 rides per day, with 45 riders on average per ride.
The season Will last for 130 days per year. The ticket price per rider is
expected to be R6.25 in the first year, with an annual increase of 5%. The
variable cost per rider will be R1.75, with a total annual fixed cost of R625
000. The ride will be dismantled after six years at a cost of R354 000, and the
parts will be sold for R700 000. The capital cost is 8.50%, and the marginal
tax rate is 25%. a. Calculate the initial outlay, annual after-tax cash flow for
each year, and the terminal cash flow. (14) b. Calculate the NPV, IRR, and
MIRR of the new equipment. Also, indicate whether the project Question 1 (10
Marks) Given the following set of cash flows: Period Cash Flow 1 45 000 2 40
000 3 35 000 4 30 000 5 25 000 (2) a. If your required rate of return is 9% per
Assignment 5
(COMPLETE
ANSWERS)
Semester 2
2024 - DUE 15
October 2024
[Type the document subtitle]
, [Pick the date]
[Type the company name]
Exam (elaborations)
FIN3704 Assignment 5 (COMPLETE ANSWERS)
Semester 2 2024 - DUE 15 October 2024
Course
Applied Financial Management (FIN3704)
Institution
University Of South Africa (Unisa)
Book
ADVANCED FINANCIAL MANAGEMENT (AFM).
FIN3704 Assignment 5 (COMPLETE ANSWERS) Semester 2 2024 - DUE 15
October 2024 ; 100% TRUSTED Complete, trusted solutions and
explanations.. Ensure your success with us..
Question 2 (20 Marks) The Port Saint John Water Park has thought about
buying a new log flume ride. The equipment costs R900 000 to purchase, and
installation costs an additional R56400. The equipment has a six-year
expected life and will be depreciated using the MACRS seven-year class life.
Management anticipates 160 rides per day, with 45 riders on average per ride.
The season Will last for 130 days per year. The ticket price per rider is
expected to be R6.25 in the first year, with an annual increase of 5%. The
variable cost per rider will be R1.75, with a total annual fixed cost of R625
000. The ride will be dismantled after six years at a cost of R354 000, and the
parts will be sold for R700 000. The capital cost is 8.50%, and the marginal
tax rate is 25%. a. Calculate the initial outlay, annual after-tax cash flow for
each year, and the terminal cash flow. (14) b. Calculate the NPV, IRR, and
MIRR of the new equipment. Also, indicate whether the project Question 1 (10
Marks) Given the following set of cash flows: Period Cash Flow 1 45 000 2 40
000 3 35 000 4 30 000 5 25 000 (2) a. If your required rate of return is 9% per
