Masada Energy is considering setting up a bottling plant in Namibia or Zimbabwe. The project is mutually exclusive project. The project requires R150 million. The WACC is 9% in Namibia and 11% in Zimbabwe. The corporate tax is 25% in Namibia and 30% in Zimbabwe. The company will depreciate the projects at 20% per annum in both countries. The company expect not residual value at the end of the projects in either countries. The management has provided you with the following expected cash flows from each of the countries under consideration. NAMIBIAN CASHFLOWS YEAR 1-5 1 2 3 4 5 R52,000,000 R44,670,000 R87,500,000 R78,000,000 R98,750,000 ZIMBABWEAN CASHFLOWS YEAR 1-5 1 2 3 4 5 R40,600,000 R56,000,600 R60,700,000 R82,000,000 89,000,000
Masada Energy is considering setting up a bottling plant in Namibia or Zimbabwe. The project is mutually exclusive project. The project requires R150 million. The WACC is 9% in Namibia and 11% in Zimbabwe. The corporate tax is 25% in Namibia and 30% in Zimbabwe. The company will
NAMIBIAN CASHFLOWS YEAR 1-5
|
1 |
2 |
3 |
4 |
5 |
|
|
R52,000,000 |
R44,670,000 |
R87,500,000 |
R78,000,000 |
R98,750,000 |
|
ZIMBABWEAN CASHFLOWS YEAR 1-5
|
1 |
2 |
3 |
4 |
5 |
|
R40,600,000 |
R56,000,600 |
R60,700,000 |
R82,000,000 |
89,000,000 |
As the Finance Director at Masada, you have tasked by the board to evaluate these projects and advise them which of the project the company must undertake.
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