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5 6. 7 *30% in the month in which the transaction takes place, and these customers are entitled to a 5% discount. *65% in the following month The rest is usually written off as bad debts Budgeted purchases of inventory are as follows: December 2022 R1 000 000 January 2023 R800 000 February 2023 R920 000 Fifty percent (50%) of the purchases are for cash. The remainder is paid in the month after the purchase. The monthly salaries amount to R150 000. Salaries are expected to increase by 9% with effect from 01. February 2023 for those employees who presently make up 80% of the salary bill. The salaries of the remaining 20% are expected to increase by 6%
7. 8. 5.1.3 5.1.4 9. 10. The monthly salaries amount to R150 000. Salaries are expected to increase by 9% with effect from 01 February 2023 for those employees who presently make up 80% of the salary bill. The salaries of the remaining 20% are expected to increase by 6% Interest at 18% per annum on the loan balance is paid at the end of each month. The loan balance on 31 December 2022 was R400 000 and a capital repayment of R100 000 will be made on 01 February 2023 Part of the building is sublet to a tenant and rent is collected monthly. The lease agreement for the year ended 31 January 2023 reflected the rental as R180 000 per annum. The rental will increase by 10% with effect from 01 February 2023 Other operating expenses are budgeted at R40 000 per month. This amount includes R5 000 for depreciation Operating expenses are paid for in the month in which they are incurred Question 5 Use the information provided to answer the questions. 5.1 Use the information provided below to calculate the following Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5 Calculate the Payback Period of Project A (expressed in years, months and days) 5.1.1 5.1.2 Calculate the Accounting Rate of Return (on average investment) of Project B (expressed to two decimal places) Calculate the Net Present Value of each project (with amounts rounded off to the nearest Rand) Use your answers from question 5.1.3 to recommend the project that should be chosen Motivate your choice (3 marks) (5 marks) (6 marks) (1 marks)
Question 5 Use the information provided to answer the questions. 5.1 Use the information provided below to calculate the following. Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5. Calculate the Payback Period of Project A (expressed in years, months and days). 5.1.1 5.1.2 5.1.3 paid for in the month in which they are incurred 5.1.4 Calculate the Accounting Rate of Return (on average investment) of Project B (expressed to two decimal places). Calculate the Net Present Value of each project (with amounts rounded off to the nearest Rand) Use your answers from question 5.1.3 to recommend the project that should be chosen. Motivate your choice. (3 marks) (5 marks) (6 marks) (1 marks)
INFORMATION Zeda Enterprises has the option to invest in machinery in projects A and B but finance is only available to invest in one of them. You are given the following projected data: Initial cost Scrap value Depreciation per year Net profit Year 1 Year 2 Year 3 Year 4 Year 5 Net cash flows Project A R300 000 R40 000 R52 000 R20 000 R30 000 R50 000 R60 000 R10 000 Project B R300 000 0 R60 000
€ D O 8/11 Year 2 Year 3 Year 4 Year 5 Net cash flows Year 1 Year 2 Year 3 Year 4 Year 5 G + 75% Additional information The discount rate used by the company is 12% ← 1 R30 000 R50 000 R60 000 R10 000 B R90 000 R90 000 R90 000 R90 000 R90 000 B C
5.2 Use the information provided below to calculate the Internal Rate of Return (expressed to two decimal places) using interpolation. INFORMATION (5 marks) A machine with a purchase price of R1 200 000 is estimated to eliminate manual operations by R400 000 per year. The machine is expected to have a useful life of four years. APPENDIX 1: PRESENT VALUE OF R1
Number d Pods 1 2 3 4 5 7 8 6 1% A A 3% 45 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 10% 17% 12% 19% 20% 25% 09901 05804 05709 09615 09524 09434 09346 09259 09174 09091 09009 08929 08850 08772 0896 0621 02547 05475 08403083363000 0.5000 09612 09405 0246 09070 0800 08734 08573 08417 08264 08116 07972 0.7831 0.7685 07561 0742 0735 07182 07062 06044 06400 09/06 03423 09151 080 038 086 08163 079 07722 07513 07312 67118 06801 06750 06575 06407 06244 06086 05804 05787 05130 0.9610 09238 0.8885 02548 0.8227 07921 0.7629 07350 0.7064 06630 06587 06355 06133 05821 05718 05523 05337 05158 047 0423 04096 0.9515 05057 08626 0.1219 07835 07473 07130 05806 06499 06209 05435 05674 05428 05154 0.4972 0.4761 04561 04371 04190 04019 03077 05327 0.8706 08131 07599 07107 06651 06227 05420 0.8880 08375 07903 0.7462 0.7050 06663 06302 05963 05645 05346 05066 0.4803 04556 04323 04104 0.3898 03704 03521 0.3349 02521 0.5835 05470 05132 04817 04523 04251 3996 0.3759 0.3538 01112 0.3139 0.299 0.2791 02097- 09235 08535 07894 0.7307 06768 06274 05820 05403 05019 0.4665 0.4335 04039 03762 03506 03269 03050 02345 02640 02467 02126 0.1678 09143 08368 07664 07006 06446 0.5919 05439 05002 04604 04241 03909 03606 03329 03075 02843 02630 02434 02255 02090 01938 01342
9 10 11 12 13 14 15 16 17 18 19 1.9 D C 09143 0868 0.7664 07026 06446 05919 05439 05002 04604 04241 03909 03606 01329 0.36/5 07543 02530 02434 02255 0220 01 01347 09053 08203 07441 06756 06139 05584 0.5083 046312 04224 03855 0.3522 03220 02946 02657 02472 02267 02080 01911 0.1756 01615 0174 0.8963 0.8043 07224 06496 0.5847 05268 04751 04299 03875 0.3505 0.3173 02875 02607 02366 02149 01954 01778 01619 01476 01346 0 0.8874 0.7885 07014 06246 0.5568 0.4570 04440 0.3971 0.3595 0.3586 02858 02567 02307 02076 01869 01685 01520 01372 0.1340 0.1122 07 08787 07730 06810 0.6006 05303 0.4688 0.4150 03677 0.3262 02897 02575 02292 02042 01821 01625 01452 01299 0116301042 00150050 0.8700 0.7579 06611 0.5775 05051 04423 0.3878 03405 02992 02633 02320 02046 0.1807 01587 0.1413 01252 01110 00965 00676 0.0779 00440 08613 07430 06419 05553 04810 04173 03624 03152 02745 02394 02090 01827 01599 01401 0.1229 01079 00949 00835 0.0736 00649 0052 08528 0.7284 06232 05339 04581 03936 0.3387 0.2919 02519 02176 0.1883 01631 0.1415 0.1229 0.1069 0.0930 0.0811 0.0708 00616 00541 00 08444 07142 06050 05134 04363 03714 0.3166 02703 02311 01978 01696 01456 01252 01078 00929 00802 00683 00600 00520 00451 00225 08360 07002 05874 04936 04155 03503 02959 02502 02120 01799 0.1528 0:1300 01108 0.0946 0.0808 0.0691 00582 00506 00437 00376 0 68277 06864 05703 04746 03957 03305 02765 02317 01945 01635 01377 01161 00961 00829 00703 00556 00506 00431 00367 00013 0014 & E
1/ 16 18 19 R 20 25 30 40 13 50 0.85 0.7294 0672 05339 04581 076 017 02919 02519 02176 01663 01631 01415 01229 0.1069 00530 60011 000 00616 041 0544 0.7142 06050 05134 0.4363 03714 0.3166 0273 02311 019/8 01686 01456 0.1252 05078 00829 00802 0063 0060005 00451 025 0830 0.7002 0.5674 04536 04155 03503 029 02502 02120 0.1799 01526 01300 0.1108 00546 60808 0091 00582 0050800437 0376 000 08077 06864 05703 04746 03957 0335 02765 02317 01945 01635 0.1377 01161 00961 0082906703 006 00506 00431 00367 00113 00144 08195 06730 05537 04564 0.3769 03118 02564 02145 01754 0.1486 01240 03337 00668 00728 00611 0.0514 00433 00365 00 01 00115 07796 06095 04776 03751 02963 02330 01842 01460 01160 0.0923 0.0736 00568 00471 00378 00304 00245 00197 00160 0.0129 00925 000 07419 05521 04120 03083 02314 01741 01314 00954 0.0754 00573 00437 00334 0.0256 00196 00151 00116 00090 0.0070 00054 60042 00012 06717 0.4529 03066 02083 01420 00972 0.0668 00460 00318 0.0221 00154 0.0507 0.0075 0.0053 0.0037 0.0026 00019 0.0013 0.0010 0000 00001 06080 0.3715 0.2281 01407 00872 00543 0.0339 00213 00134 00085 00054 00035 0.0022 0.0014 0.0009 0.0006 0.0004 0.0003 0.0002 0.0001 05504 03048 01697 0.0951 0.0535 0.0303 0.0173 0.0099 00057 00033 0.0019 00011 00007 00004 0.0002 . 0.000100001 .
P Perode 1 2 3 4 5 TN 0.9901 29410 15704 1948 19020 48534 APPENDIX 2: PRESENT VALUE OF A REGULAR ANNUITY OF R1 PER PERIOD FOR N PERIODS T 26 2.8839 47135 A ECOS 3% 19135 38077 3.7171 2806 AN 7 09709 09615 0.9524 09434 09346 5472 NG 45797 44518 6% 18554 18334 27751 27232 26730 16299 35460 52421 50757 34651 43295 42124 7% 49173 26243 3.3872 47665 IN 1.7833 25771 3.3121 39907 NG 46279 10% 11% WIT 13% 12% 43953 14% 09258 09174 09091 05009 08529 0850 08772 08656 0821 08547 0645 654363 17591 17355 17125 16901 16681 16467 16257 160852 15852 1526 15465 15278 475 15% 4111419975 14% 17% 38987 25313 2469 24437 24018 23612 23216 22832 22459 22096 21743 2139 21065 ION 32397 11699 11024 30373 29745 29137 28550 2792 2742 25801 2638 25467 3.8097 37908 36959 36048 15172 34331 33522 32743 31943 11272 10576 29906 17% 9 37045 3447 35860 9 13295 ING 14M 14906 3
5 6 . 9 10 13 14 11 12 7 6782 647230 6.2303 6.0021 57064 5.500 48534 47135 45797 5.7965 56014 54172 52421 5.0/5/ 49173 76517 73295 70197 67327 64632 85660 94713 8900 85302 41109 7.7217 112551 10.5753 99640 9.3851 42124 4.1002 3.9927 3885/ 37908 168 350 35172 34331 33572 32743 31993 31772 1055 296 96009 47965 CHIK'S 8.3838 12.1337 113454 106350 9.9856 9.3936 8.8527 5.9713 57466 7:3601 70236 67101 103676 97868 9.2526 8.7605 8.3064 78869 74967 7:1390 52064 50330 4.56M 7.7861 74953 7.1078 6.8017 65152 6.2669 59952 57590 55370 5322 51317 49464 47716 4.605 44506 43008 4633 4000 64177 61446 582 56502 542 52161 501 48332 46566 4.4941 43009 4.155 7.9427 75361 83577 FAITE 63131 2013 2.792 27432 2001 2 79038 25881 44859 43553 42305 41114 39575 38867 17845 36847 1582 146 147 1125 47122 45638 447% 4283 404 406 29224 1815 17057 1406 55348 53349 51461 49676 479 4639 44873 43436 42072 40776 19544 183/2 6805264951 62065 59377 56869 54527 52337 50286 48364 46560 4.456543271 7:1607 68137 6.4924 61944 59176 5.6603 54206 51971 45884 47902 461054432 74569 71034 67499 64235 61218 58424 55831 53423 51183 4905 4747 45327 13:0037 12.1062 112961 105631 9.8966 9:2950 87455 82442 7.7862 7366769019 66282 63025 60021 57345 54675 52293 50081 48023 4510
25 30 40 20 50 14 130037 12.1062 1121 10:5631 1206 12900 11.1194 10.3797 57122 15 N 19 17 18 118251 125493 1133/29 147179 115777 125611 116523 10 8 10 1098 142919 131661 12 165/ 16.3983 14.990 13.7535 126593 112741 10.4773 116296 180456 16.3514 148775 13.5903 124622 25.8077 22.3965 19 6004 17 2920 9.1079 8.7855 8242 1782 734749019 662 6325 60021 5725 54625 $2290 4 45N 80607 76061 709 68 6404 61422 5544 1525 100 105 45 44PS 9.4466 17.27280 15675 143238 131339 12.0853 11.1581 10.3356 328347 27 3555 231148 197928 17.1591 15.0463 8.500 6 105540 2 &Q 9.7632 9.12% 85436 802% 75488 71196 67291 63729 50472 57687 547 52223 4567 ATING 10.82% 10.0591 93719 8.79568.2014 77016 72457 6609 6467461280 58178 55339 5272 101 48122 88514 8316 78237 13792 65740 46000 42851 1952 1485 5453 510 49377 4726 90096 89501 83649 78093 73658 69380 65504 12 5.8775 55645 531625000 4545 22.0232 19.5235 174131 156221 14.0939 127834 11536 106748 98226 90770 84217 78431 73300 68729 64641 60671 57662 549 11951 490% 98181 91285 85136 79633 78054 70248 66231 62583 59268 56278 53527 510094 15.3725 137648 124090 112578 102737 94269 86838 80552 74957 70027 65660 61772 58294 55 52347 497 133317 119246 10.757497791 89511 82438 76344 71050 66418 62135 58713 55412 5252 46 39 1961 314236 257298 21 4822 182559 15.7619 13.8007 12.2335 109617 99148 90417 63045 76752 71327 66605 62463 58801 55541 52521 435 C
d 16 40 650 25 40 20 x a 18 19 17 155623 14.2919 13 1661 12.1657 112741 104773 Management Acco. * 11/11 15 118651 1288 11.9179 11.1184 10.3797 97172 9 107985996 80607 76061 7.1909 68109 64624 61422 58474 55755 53042 50916 45759 46755 14.7179 135777 125611 116523 10.8378 10 1059 0 € 172260 156785 143238 131339 12.0853 18.0456 163514 14.8775 13.5903 12 4622 16.3963 149900 137535 126583 116896 108276 100591 9.4096 8.8514 83126 78717 9.7630 10.3356 258077 223965 196004 172920 15.3725 13.7648 12.4090 96036 11.4699 105940 98181 125% 220032 195235 174131 156221 14 0909 127834 116536 106748 11.258 A 91216 85436 80216 7548871196 67291 63729 60472 57487 54746 52223 49897 47746 32.8347 27.3555 231148 197928 17.1591 150463 133317 119246 4 93719 87556 8.2014 7.7016 72497 6.8399 6.4674 6.1280 58178 55339 52732 5030 48122 Q © 8.5501 83649 7.809373658 69380 73792 69740 66009 62651 59542 56685 54053 51624 49377 47296 65504 6.1982 58775 5.5845 53162 5070048435 9.1285 85136 79633 74694 70048 66231 6.2593 59288 56278 53527 510094866 98226 90770 84217 75431 73300 68729 64641 60971 57662 54669 5.1951 45476 10273794269 8938 8055274957 70027 65660 61772 58254 55168 5234745789 107574 97791 89611 82438 76344 71050 66418 62135 58713 55482 5252499 391961 314236 257298 21 4822 18 2559 15.7619 13 8007 12:2335 109617 99148 90417 83045 76752 71327 6.6605 62463 58801 55541 52623 4995 44 9550 34 7609 276756 226295 189293 16.7614 146092 123766 11.0480 99672 90736 83240 76873 71401 66651 62402 58819 55553 52630 49999 Pa Sign In E E