Country : Australia
Assignment Task:

Task:

(a) Refer to the "Lecture Illustration - 4A-1" as discussed in the "Week-5 Recorded
Topic Discussion Session", calculate the (i) NPV, (ii) IRR, (iii) PVI, (iv) Payback period,
(v) Discounted payback period for ALTERNATIVE Investment Proposal-Q if the required rate of return is 10.82 and the annual net cash flows of Proposal Q are: Year-
0  ($300m); Year-1 $84m; Year-2 $108m; Year-3 $146m and Year-4 $168m.
(b) Calculate the crossover rate (between proposals P and Q) based on changed cash flow data mentioned in the requirement-a above. Show the range of required rates for which either proposal-P or proposal-Q would be preferred.
(c) Based on your findings in requirements a and b above, what would be the decision of selection of proposal (when the required rate of return is 10.82 percent)?
(d) Refer to the "Lecture Illustration - 4B-2" as discussed in the "Week-6 Recorded
Topic Discussion Session", calculate the tax implication in the third year relating to the sale of the equipment if the depreciation rate is 21% straight line and the purchase price (of the equipment) is $38,860.

(e) Refer to the "Lecture Illustration - 4B-4" prepare a new cash flow table (in the "CF- 4B-4" sheet of the Excel Template provided, using the way explained in the ( eLearning video), and calculate the NPV, IRR, PVI and discounted payback period after incorporating the following changes (other information will remain the same as provided in the illustration): 

  •  The installation cost for the juice producing machine would be $6,000 and the transportation cost of $5,000 would be paid by the supplier. The machine will have an economic life of six years and would be depreciated at 13 percent straight line for the tax purpose.
  •  Sales are expected to grow at 23% in each year until the 6th year. Costs have been estimated to be 47 percent of sales revenue. In addition, there would be an annual fixed overhead cost of $8,610.

 

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  • Uploaded By : Pearl
  • Posted on : April 27th, 2019
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