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Yes, I used 7% for part B in Q1. I also didn’t inflate it so used up straight values from cash flows. and I think I hate 477 something like that as NPV.
i think i get 11.43% (if im not mistaken) for the WACC, you should use 12% cost of equity instead of 13% you calculated in the require a). the mv value of the equity is 8m x 7.16, and mv of bonds is 5000/100×103.42 . the discount rate to calculate the irr should be 6% and 5%. the bonds will give interest of 8.5% which after tax is 8.5%(1-0.3).
for question 3, i got something like 5002 if using EOQ. and 5454 using the current ordering cost
the market research cost is a cost that has already incrred, therefore it is a sunkcost hence, does not included in the NPV calculation
@ nizarsalleh I got the same 😀 I got 5002 and 5454 and did the difference for part iii). YES! lol
Part b) of Q3 I multiplied the price with 60/365 and then 30/365 and took the difference and multiplied with cost.
I think I was left with 1830.44 something….. Not sure if it’s right?
And yes wacc o used 12%. wooohooo cos I thought I did wrong.
Well I messed that in Q1 :(. But where did you all put 2000,000? I put that in year 1 🙁
Still would get marks tho? right? dammm :(:(
My WACC was 11.43 too so I think it should be ok. As for EOQ, no one averaged the holding costs for the part a?? I did like [(300,000/12)* 140%] / 2 to get 17500 units per month. Was that right?
The investment should go in year 0. But I would think that only one mark would be lost per mistake.
For holding cost I did 25000/2 + 10,000(this is buffer as it said 40%) multiplied the whole thing by 0.10.
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can any I tell what trearment was there for 200000 cost?????
In question 1, did you all reclaim the working capital? If so, did you add it as a cashflow into year 4 or 5?
I put 4, but I’ve been questioning it since… seems strange because there is then a working capital outflow and inflow in the same year.
Was that in question 1 gemini? The treatment was to ignore it, as it was a sunk cost.
It said 40% of sale if I recall. So if you are selling all the 25000 per month. then shouldn’t you add 40% of the 25000 too?
I recovered the working capital in year 4. I didn’t have any other working capital cash flows in that year though (unless you are talking about the beginning of that year, i.e. 12 months earlier).
@clevergirl i edited my post. forgot to mention.
@geteveryone, yes you should recover the working capital as in year 4, your working capital is reduced(recovered) hence, you should recover in year 5. again, if you state your assumption on working capital, you wont be penalized.@kaish ya we included the holding cost of the buffer stock.
clever girl i did the same in question number 3 . i did it with current 60/365 and revised 60/365 ……….. and the difference wuld then be multiplied it with finance cost ……. and yeah the interest was 805% (1 minus 30%) gives 5.9 sunthing …… but guess i did mistake in irr ….. i took discount rates of 10 % and 5% …… and for question number 1 , i didnt inflate the nominal cashflows and the rate would be 12 percent …….. but in part b i inflated the sales and costs to general inflation .. and the rate was 7% ………. how was lease to be calculated ? kuz i came u with the decision of buying … kuz it gives sumthing in positive …….. any buddy did same like me ?
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