QUESTION 1 (50 Marks] Use the following information to answer Questions A, B C, and D ABC Corporation has identified a project with a capital investment of R10 000. The company uses straight line depreciation. The book value at the end of the project (Year 3) is R4 000. At the end of the project, the asset will be disposed off at R6000. The company is subject to a tax rate of 28%, and a cost of capital of 10%. Additional Information on the cash flow analysis is shown in the Table below: Period 2 0 1 -R10000 -R550 R400 1 Capital Investment and disposal 2 Change in working capital 3 Sales 4 Cost of Goods Sold S Other costs 6 Tax on income 7 Operating Cash Flow 8 Net Cash Flow 9 Present Value at 12% 10 Net Present Value 3 4 ? -R2000 R1500 R48000 R32400 R2000 ? -R750 R15000 R9500 R2000 ? R900 R2200 ? R2000 ? 2 ? ? 2 ? 2 Page 12 of 14 SCHOOL OF ECONOMIC AND BUSINESS SCIENCES. CORPORATE FINANCE 1 (BUSE 2000/BUSE2001) EXAMINATION, JUNE 2019 A. Calculate the after tax proceeds from the disposal of the asset in year 4 (6 Marks) B. Calculate the tax on income for years 0 to 3 (16 marks) C. Calculate the Net Cash Flow for years 0 to 4 (18 Marks) D. Calculate the Net present value of the project. (10 marks)