SECTION A [100 MARKS] Answer ALL the questions in this section. QUESTION ONE Your parents set up a trust fund for you 11 years ago that is now worth R25 786,51. If the fund earned 9% per year, how much did your parents invest? 1.1 (5 marks) Suppose you are offered an investment that will allow you to double your money in 11 years. You have R15 000 to invest. What is the implied rate of interest? 1.2 (7 marks) Suppose you have a 1-year old son and you want to provide R92 000 in 18 years towards his college education. You currently have R11 000 to invest. What interest rate must you earn to have the R75 000 when you need it? 1.3 (7 marks) Suppose you want to buy a new house. You currently have R15 000 and you figure you need to have a 10% down payment plus an additional 5% of the loan amount in closing costs. If the type of house you want costs about R150 000 and you can earn 9.2% per year, how long will it be before you have enough money for the down payment and closing costs?

QUESTION THREE As a financial manager of Drak Enterprises, you are required to analyse two proposed capital investments, Projects Sun and Moon. Each has a cost of R100 000, and the cost of capital for each project is 12%. Depreciation on each project is estimated at R25 000 per year. The projects expected profit are as follows: Year Project Sun Project Moon 1 R40 000 R10 000 2 R5 000 R10 000 3 R5 000 R10 000 4 (R15 000) R10 000 3.1 Calculate the payback period for each project (In years, months and days). (9 marks) 3.2 Calculate the NPV for each project (9 marks) 3.3 Which project or projects should be accepted if they are independent? (2 marks) 3.4 Calculate the ARR for Project Sun. (5 marks)

REQUIRED Use the information provided below to calculate the following: 4.1 Calculate Break-even quantity (6 marks) 4.2 Calculate Break-even value (3 marks) 4.3 Calculate the Expected total Marginal income and Net profit/loss. (5 marks) Answer each of the following questions independently: (5 marks) Calculate the number units required to break-even if: 4.4 1. the selling price is reduced by R400, and 2. variable selling and administrative expenses are adjusted to 8% of sales. Answer each question independently (6 marks) 4.5 Suppose Marie Manufacturers wants to make provision for an increase of R70 800 in fixed manufacturing overheads and a decrease in variable manufacturing costs of R240 per unit. Taking these changes into account, calculate the new break-even value.