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BCOM FIN - Financial Management 2A Jan 2017 SUP_Q3&Q5.xlsx...

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POSTGRADUATE DIPLOMA INBUSINESS MANAGEMENTSOLUTION BOOKFINAL EXAMINATION MAY 2016
Question 5Esta Enterprises5.1.1Project BInvestmentR -450,000Year 1 Cash flow159,000-291,000Year 2 Cash flow159,000-132,000Year 3 Cash flow159,00027,000Year 4 Cash flow159,000Payback period is 2 years 10 monthsNote:R 159,0009.9962 Months5.1.2Accounting rate of return: ProjectA= Average annual profitX 100Y136000Average investmentY275000=R 84,600X 100Y3102000(450000+60000)/2Y4129000=33.18%Y581000423000Average846005.1.3Project AYearCash inflowDiscountPresentFactorvalue1114,0000.8929101,7912153,0000.7972121,9723180,0000.7118128,1244207,0000.6455133,6195159,0000.567490,2175 (Scrap)60,0000.567434,044Total PV609,765Investment-450,000NPV (positive)159,765Project BR159 000 X 3.6048 =573,163Investment-450,000NPV (positive)123,1635.1.4Project A5.2Rate151617Cash Flow129,000.00129,000.00129,000.00Discount Factor3.35223.27433.1993PV Cash Flow432,433.80422,384.70412,709.70Investment-420,000.00-420,000.00-420,000.0012,433.802,384.70-7,290.30IRR =16% +R 2,3852384.70+7290.3= 16% +R 2,3859675=16.25%R132000X 12 mthsIt has a higher net present value.
Question 3 SolutionArmsco LimitedTraditional absorption SystemTotal Overheads2,340,000.00Total direct labour hours180,000.00Overheads per direct labour hour13.00Manufacturing TimeProduct XProduct YProduct ZTotalLabour Hours162,000.0016,200.001,800.00180,000.00Number of Units108,000.003,600.00180.00111,780.00Time per unit1.504.5010.00Overhead cost per unitTime per unit1.504.5010.00Overheads per direct labour hour13.0013.0013.0019.5058.50130.00Activity Based SystemActivityActivity CostCost Driver volumesActivity rates

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Net Present Value, Actual Overhead Budgeted Fixed Overhead

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