Answer Happy

QUESTION 1 (45 marks) Cape Town Printers is considering
replacing one of their old heavy duty printing machines to increase
sales and decrease input costs. The new machine will cost the
company R18 750 000. All other costs to get the machine ready for
use will amount to R1 875 000. The new machine's estimated useful
life is 10 years, and depreciation will be written off using the
straight-line method. The machine's estimated selling price at the
end of its useful life amounts to R4 687 500 The current machine
has a useful life of 10 years, of which 5 years remain. At the end
of the machine's useful life, the market value will be R937 500,
while the current machine's total cost price amounts to R10 312
500. Cape Town Printers has a potential buyer for the existing
machine, and the buyer is willing to pay R3 750 000. Cape Town
Printers estimate sales to increase by R4 678 500 and operational
cost to decrease by R1 875 000. The company has a required rate of
return of 13%, and the tax rate is 28%. Required: 1.1) Prepare a
replacement analysis in an Excel workbook based on the information
supplied. Make sure to include the following:  Cash flow analysis
to illustrate the effect of replacing asset (machine) with a new
one.  You need to apply your Excel skills and knowledge to create
the analysis.  Include a calculation of: o the replacement
analysis' Net Present Value, Internal Rate of Return and Payback
Period. You need to provide your Excel workbook as an answer, and
marks awarded as follow: Formula view (15 marks)