FORMATIVE ASSESSMENT 1 [100 MARKS] Answer ALL questions in QUESTION 1 (25 Marks) As a financial manager of Dublin Enterprises, you are required to analyse two proposed capital investments, Projects ABC and Project XYZ. Each has a cost of R400 000, and the cost of capital for each project is 15%. Depreciation is calculated on the straight-line method. The projects' expected profit are as follows: PROJECT ABC PROJECT XYZ Year 1 R80 000 R30 000 R 10 000 R30 000 AWN R10 000 R30 000 (R30 000) R30 000 Required 1.1 Calculate the payback period for each project (In years, months and days). (10) 1.2 Calculate the NPV for each project (10 ) 1.3 Which project or projects should be accepted if they are independent? (1 ) 1.4 Calculate the ARR for project XYZ ( 4 ) QUESTION 2 (25 Marks) INFORMATION Valpre Limited plans to manufacture bar fridges and the following information is applicable: Estimated sales for the year 10 000 units at R6 800 each Estimated costs for the year: Variable costs Direct Material R1 040 per unit Direct Labour R700 per unit riable Manufacturing Cost R220 per unit Selling expenses 10% of selling price per unit sold Factory overheads (all fixed) R875 000 Administrative expenses (all fixed) R786 000FORMATIVE ASSESSMENT 1 [100 MARKS] Answer ALL questions in QUESTION 1 (25 Marks) As a financial manager of Dublin Enterprises, you are required to analyse two proposed capital investments, Projects ABC and Project XYZ. Each has a cost of R400 000, and the cost of capital for each project is 15%. Depreciation is calculated on the straight-line method. The projects' expected profit are as follows: PROJECT ABC PROJECT XYZ Year 1 R80 000 R30 000 R 10 000 R30 000 AWN R10 000 R30 000 (R30 000) R30 000 Required 1.1 Calculate the payback period for each project (In years, months and days). (10) 1.2 Calculate the NPV for each project (10 ) 1.3 Which project or projects should be accepted if they are independent? (1 ) 1.4 Calculate the ARR for project XYZ ( 4 ) QUESTION 2 (25 Marks) INFORMATION Valpre Limited plans to manufacture bar fridges and the following information is applicable: Estimated sales for the year 10 000 units at R6 800 each Estimated costs for the year: Variable costs Direct Material R1 040 per unit Direct Labour R700 per unit riable Manufacturing Cost R220 per unit Selling expenses 10% of selling price per unit sold Factory overheads (all fixed) R875 000 Administrative expenses (all fixed) R786 000