BEC313/BEC313E Financial Management Assignment 2: Individual Assignment due Date May 20, 2022 Total Marks: 80 Marks QUESTION 1 (30 MARKS) A company is able to sell 50 000 cans of deodorant per year for the next three years at a price of R4.00 per can. The variable cost per unit is R2.50 while it required R50 000 in research and development to develop the product. The fixed costs associated with the project are R12 000 while the equipment will cost R90 000 including installation costs. An initial outlay of R20 000 will be required for working capital. The equipment will be depreciated using the straight line method over three years and has a salvage value of R20 000. The companys tax rate is 40% while the cost of capital is 20%. 1.1 What are the associated cash flows for the project? [15 Marks] 1.2 Calculate the payback period, accounting rate of return, IRR, NPV and profitability index associated with the project [15 Marks] QUESTION 2 (25 MARKS) The table below gives information extracted from the annual accounts of Make-it (Pty) Ltd for the past two years. Make-it (Pty) Ltd : Extracts from year-end accounts: Year 1 R'000 Year 2 R'000 Stocks: Raw materials Work-inprogress Finished goods Purchases Cost of goods sold Sales Debtors Trade creditors 276 186 285 1 440 2 196 2 376 594 252 291 194 259 1 404 1 944 2 160 562 210 You are required to: Answer the following questions: a) Calculate the length of the working capital cycle for years 1 and 2 assuming 365 days in the year and using end of year working capital balances, not averages. [