3. The following information was provided by Intel Enterprises: 1. The bank balance on 31 December...

 

  

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3. The following information was provided by Intel Enterprises: 1. The bank balance on 31 December 2022 is expected to be R40 000 (unfavourable). Credit sales are expected to be as follows: December 2022 R576 000 January 2023 R540 000 February 2023 R648 000 Credit sales usually make up 40% of the total sales. Cash sales make up the balance. Cash customers receive a 10% discount. 4. Credit sales are normally collected as follows: 5 *30% in the month in which the transaction takes place, and these customers are entitled to a 5% discount. *65% in the following month The rest is usually written off as bad debts. Budgeted purchases of inventory are as follows: December 2022 R1 000 000 January 2023 R800 000 February 2023 R920 000 6. 7. 8. Fifty percent (50%) of the purchases are for cash. The remainder is paid in the month after the purchase. The monthly salaries amount to R150 000. Salaries are expected to increase by 9% with effect from 01 February 2023 for those employees who presently make up 80% of the salary bill. The salaries of the remaining 20% are expected to increase by 6%. 10. Interest at 18% per annum on the loan balance is paid at the end of each month. The loan balance on 31 December 2022 was R400 000 and a capital repayment of R100 000 will be made on 01 February 2023. 9. Part of the building is sublet to a tenant and rent is collected monthly. The lease agreement for the year ended 31 January 2023 reflected the rental as R180 000 per annum. The rental will increase by 10% with effect from 01 February 2023. Other operating expenses are budgeted at R40 000 per month. This amount includes R5 000 for depreciation. Operating expenses are paid for in the month in which they are incurred. Use the information provided to answer the questions. 5.1 Use the information provided below to calculate the following. Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5. Calculate the Payback Period of Project A (expressed in years, months and days). 5.1.1 5.1.2 Calculate the Accounting Rate of Return (on average investment) of Project B (expressed to two decimal places). 5.1.3 Calculate the Net Present Value of each project (with amounts rounded off to the nearest Rand). Use your answers from question 5.1.3 to recommend the project that should be chosen. Motivate your choice. (3 marks) (5 marks) (6 marks) (1 marks) 3. The following information was provided by Intel Enterprises: 1. The bank balance on 31 December 2022 is expected to be R40 000 (unfavourable). Credit sales are expected to be as follows: December 2022 R576 000 January 2023 R540 000 February 2023 R648 000 Credit sales usually make up 40% of the total sales. Cash sales make up the balance. Cash customers receive a 10% discount. 4. Credit sales are normally collected as follows: 5 *30% in the month in which the transaction takes place, and these customers are entitled to a 5% discount. *65% in the following month The rest is usually written off as bad debts. Budgeted purchases of inventory are as follows: December 2022 R1 000 000 January 2023 R800 000 February 2023 R920 000 6. 7. 8. Fifty percent (50%) of the purchases are for cash. The remainder is paid in the month after the purchase. The monthly salaries amount to R150 000. Salaries are expected to increase by 9% with effect from 01 February 2023 for those employees who presently make up 80% of the salary bill. The salaries of the remaining 20% are expected to increase by 6%. 10. Interest at 18% per annum on the loan balance is paid at the end of each month. The loan balance on 31 December 2022 was R400 000 and a capital repayment of R100 000 will be made on 01 February 2023. 9. Part of the building is sublet to a tenant and rent is collected monthly. The lease agreement for the year ended 31 January 2023 reflected the rental as R180 000 per annum. The rental will increase by 10% with effect from 01 February 2023. Other operating expenses are budgeted at R40 000 per month. This amount includes R5 000 for depreciation. Operating expenses are paid for in the month in which they are incurred. Use the information provided to answer the questions. 5.1 Use the information provided below to calculate the following. Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5. Calculate the Payback Period of Project A (expressed in years, months and days). 5.1.1 5.1.2 Calculate the Accounting Rate of Return (on average investment) of Project B (expressed to two decimal places). 5.1.3 Calculate the Net Present Value of each project (with amounts rounded off to the nearest Rand). Use your answers from question 5.1.3 to recommend the project that should be chosen. Motivate your choice. (3 marks) (5 marks) (6 marks) (1 marks)

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511 Calculate the Payback Period of Project A expressed in years months and days 3 marks Payback per... View the full answer