276 PLAY CO

Time Year 1 Year 2 year 3 Year 4

Demand 100000 110000 130000 160000
Price 3.50 3.50 3.50 3.50
Total Value 350000 385000 455000 560000

Time Year 1 Year 2 year 3 Year 4

Demand 100000 110000 130000 160000
Variable/unit 0.8 0.8 0.8 0.8
Inflation 1.03 1.0609 1.092727 1.12550881
Total variable 82400 93359 113644 144065

Time Year 1 Year 2 year 3 Year 4

Maintenance 40000 40000 40000 40000
inflation 1.05 1.1025 1.157625 1.21550625
Total 42000 44100 46305 48620

Time Year 1 Year 2 year 3 Year 4

Fixed cost 192500 192500 192500 192500
Depreciation 87500 87500 87500 87500
Maintenance 40000 40000 40000 40000
Other fixed 65000 65000 65000 65000
inflation 1.02 1.0404 1.061208 1.08243216
Total 66300 67626 68979 70358
 PLAY CO
TIME T0 T1 T2 T3 T4 T5
CPOST SAVED 350000 385000 455000 560000
Less variable 82400 93359 113644 144065
Less Maintenance 42000 44100 46305 48620
Less other fixed 66300 67626 68979 70358
Taxable amount 159300 179915 226073 296957
Tax @ 30% 47790 53974 67822 89087
Tax relief 30000 22500 16875 35625
Investment -400000
scrap 50000
Net cash flow -400000 159300 162125 194598 296010 -53462
DF @ 15% 1.000 0.87 0.756 0.658 0.572 0.497
PV -400000 138591 122566.349 128045.768 169317.531 -26570.5939
NPV 131950
Less Termination fee 150000
NPV -18050
TAX ALLOWABLE DEPRECIATION
TIME CA WDV TAX RELIEF
0 -400000
1 100000 -300000 30000
2 75000 -225000 22500
3 56250 -168750 16875

168750
SCRAP 50000
Balancing allowance 118750 35625
277 DUO CO (DEC 07 – MODIFIED)

CONTRIBUTION
TIME 1 2 3 4
DEMAND 400000 500000 600000 600000
Contribution/unit 1.1 1.1 1.1 1.1
Contribution 440000 550000 660000 660000

Ater tax WACC 10%

 NPV
TIME 0 1 2 3 4 5
CONTRIBUTION 440000 550000 660000 660000
FOIXED COSTS 240000 260000 280000 300000
Taxable amount 200000 290000 380000 360000
Tax @ 30% -60000 -87000 -114000 -108000
Tax relief 60000 45000 33750 92250
Investment -800000
Scrap value 30000
Net cash flow -800000 200000 290000 338000 309750 -15750
DF @ 10% 1.000 0.909 0.826 0.751 0.683 0.621
PV -800000 181800 239540 253838 211559 -9781
NPV 76957
TIME CA WDV TAX RELIEF
0 -800000
1 200000 -600000 60000
2 150000 -450000 45000
3 112500 -337500 33750

337500
SCRAP 30000
Balancing 307500 92250
279 BRT CO (JUNE 11 – MODIFIED)

YEAR 1 2 3 4
DEMAND 700000 1600000 2100000 3000000
SP 5 5 5 5
INFLATION 1.03 1.0609 1.092727 1.12550881
TOTAL 3605000 8487200 11473633.5 16882632.2

YEAR 1 2 3 4
DEMAND 700000 1600000 2100000 3000000
VC/UNIT 2.8 3 3 3.05
INFLATION 1.03 1.0609 1.092727 1.12550881
TOTAL 2018800 5092320 6884180.1 10298405.6

FIXED COST 1000000 1800000 2800000 3800000

INFLATION 1.03 1.0609 1.092727 1.12550881
TOTAL 1030000 1909620 3059635.6 4276933.48
 NPV
TIME 0 1 2 3 4 5
SALES 3605000 8487200 11473633.5 16882632.2
VARIABLE 2018800 5092320 6884180.1 10298405.6
FIXED 1030000 1909620 3059635.6 4276933.48
TAXABLE AMOUNT 556200 1485260 1529817.8 2307293.11
Tax @ 30% -166860 -445578 -458945.34 -692187.933
Working capital -750000 -22500 -23175 -23870.25 819545.25
Tax reliefs 150000 112500 84375 253125
Investment -2000000

Net cash flow -2750000 533700 1445225 1172869.55 2752268.02 -439062.933

DF @ 12% 1.000 0.893 0.797 0.712 0.636 0.567
PV -2750000 476594.1 1151844.33 835083.12 1750442.46 -248948.683
NPV 1215015.32
TAX ALLOWABLE DEPRECIATION
TIME CA WDV TAX RELIEF
0 -2000000
1 500000 -1500000 150000
2 375000 -1125000 112500
3 281250 -843750 84375

843750
SCRAP 0
Balancing 843750 253125

WORKING CAPITAL
TIME 0 1 2 3 4
WC 750000 772500 795675 819545.25
INCREMENTAL -22500 -23175 -23870.25 819545.25
 291 CABRERAS CO (MAR/JUL 2021)

Details
Purchase price 800000
Maintenance 20000
Fuel cost 28000
Workings
A. Three year optimal replacement cycle Resale Value
Time interval 0 1 2 3 1
Purchase cost -800000 480000
Maintenace -20000 -21000 -22050
Fuel cost -28000 -33000 -38000
Resale value 270000
Net cash flow 0 -848000 -54000 209950
DF @ 8% 1 0.926 0.875 0.794
PV 0 -785248 -47250 166700.3
NPV -665797.7
EAC -258361.54443

Fourth year optimal replacement cycle

Time interval 0 1 2 3 4
Purchase cost -800000
Maintenace -20000 -21000 -22050 -23152.5
Fuel cost -28000 -33000 -38000 -43000
Safety net -64000
Resale value 202500
Net cash flow 0 -848000 -54000 -124050 136347.5
DF @ 8% 1 0.926 0.875 0.794 0.735
PV 0 -785248 -47250 -98495.7 100215.412
NPV -830778.2875
EAC -250838.85492
 2 3 4
360000 270000 202500

The four‐year replacement interval has the lowest equivalent annual cost and
on an expected cost basis, Cabreras Co should replace the Beast every four
years.
 289 DINK CO (SEP/DEC 2019)

A.(i) Calculate the present value of the cost of borrowing to buy.

Time interval 0 1 2 3 4 5
Cost of Mach. -750000

Tax relief 56250 42187.5 31640.625 79921.875

NCF -750000 0 56250 42187.5 31640.625 79921.875
DF @ 6.02% 1 0.943 0.89 0.84 0.792 0.747
PV -750000 0 50062.5 35437.5 25059.375 59701.6406
NPV -579738.984

Calculate the present value of the cost of leasing.

Time Details Cashflow DF @ 6% PV
0 to 3 Rental 200000 3.673 734600
2 to 5 Tax -60000 3.269 -196140
NPV 538460
Tax Allowable depreciation Ke
Year CA WDV Tax relief 6.02
0 -750000
1 -187500 -562500 -56250
2 -140625 -421875 -42187.5
3 -105468.75 -316406.25 -31640.625

316406.25
Resale value 50000
266406.25 79921.875
 273 ARMCLIFF CO

Currengt ROCE 20%

Anuual Depreciation 3000000

PRIFITABILY SCHEDULE
TIME INTERVAL 1 2 3 4
Sales revenue 10000000 8100000 6400000 5600000
Operating cost 2000000 1800000 1600000 1600000
Fixed cost 1500000 1350000 1200000 1200000
Depreciation 3000000 3000000 3000000 3000000
Profit 3500000 1950000 600000 -200000

TOTAL PROFIT 5850000

CAPITAL EMPLOYED
TIME INTERVAL 1 2 3 4
NCA 14000000 11000000 8000000 5000000
Inentories 500000 500000 500000 500000
14500000 11500000 8500000 5500000
TOTAL CE 40000000

ROCE 14.63%
 274 WARDEN CO (DEC 11 MODIFIED)

SALES SCHEDULE
TIME INTERVAL 0 1 2 3 4 5
SALES UNITS 100000 100000 100000 100000 100000
Selling price 16 16 16 16 16
Revenue 1600000 1600000 1600000 1600000 1600000

Variable cost/unit 11 11 11 11 11
Variable cost 1100000 1100000 1100000 1100000 1100000

PROFITABILTY SCHEDULE
TIME INTERVAL 0 1 2 3 4 5
Revenue 1600000 1600000 1600000 1600000 1600000
Variable cost 1100000 1100000 1100000 1100000 1100000
Fixed cost 160000 160000 160000 160000 160000
Taxable amount 340000 340000 340000 340000 340000
Tax @ 30% 102000 102000 102000 102000
Non trading cost 340000 238000 238000 238000 238000
Working capital -90000 90000
Scrap value 40000
Machine cost -800000
NCF -890000 340000 238000 238000 238000 368000
DF @ 11% 1.000 0.901 0.812 0.731 0.659 0.593
PV -890000 306340 193256 173978 156842 218224

NPV 104070

IRR 16%
 6

102000
-102000

-102000
0.535
-54570
 Product J Product J Product G
25% less DL $ $
OUTPUT 250000 Selling price (per unit) 11.2 7.8
Cost of Machine 535000 Direct costs (per unit)
Maintenance 45000 Skilled labour 1.8 0.5
Existing Mac 125000 Unskilled labour 2.3 2.8
25% Materials 3.6 2.4
Working
W1 TAD
Time Details $ TAX SAVED
T0 Original Amt 535000
T1 TAD @ 50% 267500 66875
Written down value 267500
T2 TAD @ 25% 66875 16719
Wriiten down value 200625
T3 TAD @ 25% 50156 12539
WDV 150469
T4 TAD @ 25% 37617 9404
WDV 112852
T5 TAD @ 25% 28213 7053
WDV 84639
SCRAP VALUE 40000
T6 BAL. ALLOWANCE 44639 11160