MAC2602
EXAM PACK
,Question 1
1.1 a) We are a distribution organisation that provides fresh produce and high-quality
produce to a network of independent retailers who trade under our brands. We are not
in the grocery business; we are in the people business.
1.2 d) All of the above statements
1.3 b) BMW PLC invested R in imported parts used in the assembly of electric vehicles
at the beginning of production of these vehicles.
1.4 a) The organisation is in existence for more than ten years and is in its maturity
phase.
1.5 c) Statement (1) and (2)
,Question 2
PART A (6 marks; 7 minutes)
Scenario a) Transco Ltd:
Capital Expenditure Type: Replacement Capital Expenditure.
Explanation: The purchase of a new truck to replace the damaged one is
classified as replacement expenditure because it is necessary for the
company to maintain its operations by replacing an asset that is no longer
functional.
Scenario b) Gate-Motors Ltd:
Capital Expenditure Type: Repair and Maintenance Capital Expenditure.
Explanation: Reconditioning the machine by replacing its engine and
gearbox is classified as repair and maintenance expenditure, as it restores
the asset to its original working condition, prolonging its useful life.
Scenario c) OPPO Plc:
Capital Expenditure Type: Expansion Capital Expenditure.
Explanation: The acquisition of "Face-Tech" enables OPPO to expand its
capabilities and compete better in the mobile phone market, making this an
example of capital expenditure for growth and expansion.
PART B (27 marks; 32 minutes)
a) Environmental, ethical, social, or governance factors (8 marks)
, 1. Environmental Impact: The current machine’s emissions exceed ISO
standards, leading to regulatory concerns. The company needs to invest in
environmentally friendly technology to reduce its carbon footprint and avoid
further fines for illegal dumping of materials like steel and aluminum.
2. Ethical Violations: VolleyMasters attempted to bribe environmental inspectors,
which is a significant ethical breach. This reflects poor governance and could
lead to legal consequences, reputational damage, and further regulatory scrutiny.
3. Social Responsibility: The company must address the environmental hazards it
has caused through illegal dumping. Failure to operate sustainably can harm the
community and environment, affecting public perception and customer loyalty.
b) Calculate IRR using interpolation between 15% and 18% (9 marks)
1. Present Value at 15%:
PV=R2,000,000(1.15) ^1+R3,000,000(1.15) ^2+R3,500,000(1.15) ^3
PV=(1.15)1R2,000,000+(1.15)2R3,000,000+(1.15)3R3,500,000
Present values at 15%:
PV(15%)=R1,739,130.43+R2,268,041.24+R2,308,880.31=R6,316,051.98PV(15\
%) = R1,739,130.43 + R2,268,041.24 + R2,308,880.31 = R6,316,051.98
PV(15%)=R1,739,130.43+R2,268,041.24+R2,308,880.31=R6,316,051.98
NPV(15%) = R6,316,051.98 - R6,000,000 = R316,051.98
2. Present Value at 18%:
PV=(1.18)1R2,000,000+(1.18)2R3,000,000+(1.18)3R3,500,000
Present values at 18%:
EXAM PACK
,Question 1
1.1 a) We are a distribution organisation that provides fresh produce and high-quality
produce to a network of independent retailers who trade under our brands. We are not
in the grocery business; we are in the people business.
1.2 d) All of the above statements
1.3 b) BMW PLC invested R in imported parts used in the assembly of electric vehicles
at the beginning of production of these vehicles.
1.4 a) The organisation is in existence for more than ten years and is in its maturity
phase.
1.5 c) Statement (1) and (2)
,Question 2
PART A (6 marks; 7 minutes)
Scenario a) Transco Ltd:
Capital Expenditure Type: Replacement Capital Expenditure.
Explanation: The purchase of a new truck to replace the damaged one is
classified as replacement expenditure because it is necessary for the
company to maintain its operations by replacing an asset that is no longer
functional.
Scenario b) Gate-Motors Ltd:
Capital Expenditure Type: Repair and Maintenance Capital Expenditure.
Explanation: Reconditioning the machine by replacing its engine and
gearbox is classified as repair and maintenance expenditure, as it restores
the asset to its original working condition, prolonging its useful life.
Scenario c) OPPO Plc:
Capital Expenditure Type: Expansion Capital Expenditure.
Explanation: The acquisition of "Face-Tech" enables OPPO to expand its
capabilities and compete better in the mobile phone market, making this an
example of capital expenditure for growth and expansion.
PART B (27 marks; 32 minutes)
a) Environmental, ethical, social, or governance factors (8 marks)
, 1. Environmental Impact: The current machine’s emissions exceed ISO
standards, leading to regulatory concerns. The company needs to invest in
environmentally friendly technology to reduce its carbon footprint and avoid
further fines for illegal dumping of materials like steel and aluminum.
2. Ethical Violations: VolleyMasters attempted to bribe environmental inspectors,
which is a significant ethical breach. This reflects poor governance and could
lead to legal consequences, reputational damage, and further regulatory scrutiny.
3. Social Responsibility: The company must address the environmental hazards it
has caused through illegal dumping. Failure to operate sustainably can harm the
community and environment, affecting public perception and customer loyalty.
b) Calculate IRR using interpolation between 15% and 18% (9 marks)
1. Present Value at 15%:
PV=R2,000,000(1.15) ^1+R3,000,000(1.15) ^2+R3,500,000(1.15) ^3
PV=(1.15)1R2,000,000+(1.15)2R3,000,000+(1.15)3R3,500,000
Present values at 15%:
PV(15%)=R1,739,130.43+R2,268,041.24+R2,308,880.31=R6,316,051.98PV(15\
%) = R1,739,130.43 + R2,268,041.24 + R2,308,880.31 = R6,316,051.98
PV(15%)=R1,739,130.43+R2,268,041.24+R2,308,880.31=R6,316,051.98
NPV(15%) = R6,316,051.98 - R6,000,000 = R316,051.98
2. Present Value at 18%:
PV=(1.18)1R2,000,000+(1.18)2R3,000,000+(1.18)3R3,500,000
Present values at 18%:
