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QUESTION 4 Read the below information and answer the following questions INFORMATION Extract of the Statement of Comprehensive Income for the month ended 31 May 2022 Sales Cost of sales Rent income Advertising Salaries and wages Rates and taxes Other operating expenses R 100 000 50 000 2 500 5 000 15 000 900 20 000 Additional information 1. Sales are expected to increase by 20% each month. 2. 3. 4. 5. 6. 7. 8. 9. 4.1 4.2 Thirty percent (30%) of the sales is for cash and the balance is on credit. Collections from credit sales are as follows: *30% in the month of the sale, and these customers are entitled to a discount of 5%; *65% in the month after the sale. The balance is usually written off as bad debts. Inventories are kept at a constant level. The business uses a fixed mark-up of 100% on cost. All purchases are for cash. In terms of the lease agreement, the rental will increase by R3 000 per annum with effect from 01 July 2022. Rent is received monthly. Advertising is paid monthly and is estimated to be the same percentage of sales as for May 2022. Salaries and wages will increase by 10% with effect from 01 June 2022. Rates and taxes will be paid in one instalment for the year during July 2022. Rates are calculated at 80 cents (R0.80) per R100 on the value of the premises. The premises are valued at R1 500 000. Other operating expenses are expected to increase by 5% per month. These expenses are paid for in the month in which they are incurred. The balance in the bank on 31 May 2022 is expected to be R25 000. Use the information given above to prepare the following for Lyon Enterprises for June and July 2022: Debtors Collection Schedule Cash Budget (4 marks) (16 marks) INFORMATION The management of Mastiff Enterprises has a choice between two projects viz. Project Cos and Project Tan, each of which requires an initial investment of R2 500 000. The following information is presented to you: 5.1 5.2 5.3 Year 5.4 1 5.5 2 32 5 PROJECT COS Net Profit R 130 000 130 000 130 000 130 000 130 000 PROJECT TAN Net Profit R 80 000 A scrap value of R100 000 is expected for Project Tan only. The required rate of return is 15%. Depreciation is calculated using the straight-line method. 180 000 Use the information provided above to calculate the following. Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5. Payback Period of Project Tan (expressed in years, months and days). Net Present Value of Project Tan. Accounting Rate of Return on average investment of Project Tan (expressed to two decimal places). Benefit Cost Ratio of Project Cos (expressed to three decimal places). Internal Rate of Return of Project Cos (expressed to two decimal places) USING INTERPOLATION. 120 000 220 000 50 000 (3 marks) (4 marks) (4 marks) (4 marks)