Question 3 NPU Ntate Thapelo, a business man who sometimes stakes lottery recently won a lottery jackpot of M200 000. M2

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Question 3 Npu Ntate Thapelo A Business Man Who Sometimes Stakes Lottery Recently Won A Lottery Jackpot Of M200 000 M2 1 (133.45 KiB) Viewed 29 times

Question 3 NPU Ntate Thapelo, a business man who sometimes stakes lottery recently won a lottery jackpot of M200 000. M200 000. The investment will have the following effect on his income for the first few years: Trodkog Income Income Cost of sales Salaries Depreciation Income tax 53500 Year Rate 10% M205,000 M125 000 M25 000 M50 000 30% of net income 2 0.826 Required: (a) Calculate the annual profit after tax (5marks) (b) Calculate the annual cash flow by using your calculations above (assume there are no amounts of receivables and payables at the end of the year (2mark) (c) Ntate Thapelo has also asked you perform a net present value calculation on his investment, should the income (and variable cost) increase by 10% per year and the fixed cost stay constant. Note: Year 1 represents your answer form (b) above The evaluation should be done with an interest rate of 10% using the following table: (17marks) 3 0.751 205 125 4 0.751 0.683 1 0.9090 53,600 (d) State if the investment is justified on the basis of your answer in (c) above 80 25 SS 50 S0x30% 1+5 3-5pnu 53-5: m (1mark) (Total marks = 25)