Submitted by: Submitted by joanneyip
Views: 110
Words: 1481
Pages: 6
Category: Business and Industry
Date Submitted: 11/16/2013 08:04 PM
Question 1 (a)
Cost of equipment = RM300,000.00
Project Duration = 3 years
Disposal Value = RM60,000.00
Step 1:
Depreciation Cost = Cost of investment – Disposal Value / Project Duration
= RM300,000 – RM60,000 / 3 years
= RM80,000
Step 2:
Year | Profit / Loss (RM) | Depreciation (RM) | Disposal (RM) | Cash Flow (RM) |
1 | (10,000) | 80,000 | - | 70,000 |
2 | 125,000 | 80,000 | - | 205,000 |
3 | 20,000 | 80,000 | 60,000 | 160,000 |
a(i) Step 3:
Year | Cash Flow (RM) | Discount Rate (15%) | Present Value Cash Flow (RM) |
0 | (300,000) | 1.000 | (300,000) |
1 | 70,000 | 0.870 | 60,900 |
2 | 205,000 | 0.756 | 154,980 |
3 | 160,000 | 0.658 | 105,280 |
Positive NPV = RM21,160 |
a(ii) Step 3:
Year | Cash Flow (RM) | Discount Rate (15%) | Present Value Cash Flow (RM) |
0 | (300,000) | 1.000 | (300,000) |
1 | 70,000 | 0.800 | 56,000 |
2 | 205,000 | 0.640 | 131,200 |
3 | 160,000 | 0.512 | 81,920 |
Negative NPV = RM30,880 |
A = 15%, B=25%, a=21,160, b=30,880
IRR(Internal Rate of Return) = A+[B-A x a/a+b]
15+[25-15 x 21,160/21,160+30,880] = 19.07%
Question 2 (a)
Liquidity Ratio (Year 20X0)
1. Current Ratio = Current Assets / Current Liabilities
= £110 / £60
= 1.83 : 1
2. Acid Test Ratio = Current Assets - Inventories / Current Liabilities
= £110 - £42 / £60
= 1.13 : 1
3. Average Collection Period = Accounts Receivable / Sales x 365 days
= £38 / £450 x 365 days
= 30.81 days ≈ 31 days
Efficiency Ratio (Year 20X0)
4. Total Assets Turnover = Sales / Total Assets
= £450 / £971
= 0.46 times
5. Accounts Receivable Turnover = Credit Sales / Accounts Receivable
= £450 / £38
= 11.84 times
6. Inventory Turnover = Cost of Goods Sold / Inventory
= £150 / £42 = 3.57 times
Leverage Ratio (Year 20X0)
7. Debt Ratio = Total Debt / Total Assets
= £100 + £60 /...