Question $1(10$ Marks$)$

Use the information provided in the table below to answer the given questions

Selling Price R$20$

Variable Cost $25\%$ of selling price

Fixed Cost R$150000$

Expected sales $20000$ units

a$)$ Calculate the break$-$even point in units and the break$-$even value in Rand

b$)$ Determine the margin of safety in units

c$)$ What do you understand by the term break$-$even?

Question $2(10$ Marks$)$

Albany $($Pty$)$ Ltd$,$ a furniture manufacturer, has been offered an opportunity to accept a project that has the following mixed

stream of cash flows over the next $5$ years:

Year $12345$

Cash flow $50007800500060003000$

If the company must earn at least $10\%$ on this project. What is the present value of this project?

Question $3(10$ Marks$)$

Consider two projects whose annual net cash flows are not even. Assume that each project costs

R$200000.$ The net cash flows for each year are as follows:

Year Project M Project O

$120000100000$

$24000080000$

$36000060000$

$48000040000$

$510000020000$

Calculate the Pay Back Period $($PBP$)$ of each project and recommend the project that should be selected based on the

payback method.