Umdloti Ltd plans an investment in non-current assets costing R3 000 000. The non-current assets are expected to have a four-year life, with the following net profits anticipated: Year 1 Year 2 Year 3 Year 4 R350 000 R750 000 R200 000 R170 000 Working capital amounting to R200 000 will be required at the start of the project. All the working capital will be recovered at the end of year 4. The expected scrap value of the non-current assets is R400 000. The cost of capital is 12%. Ignore taxes.
Umdloti Ltd plans an investment in non-current assets costing R3 000 000. The non-current assets are expected to have a four-year life, with the following net profits anticipated: Year 1 Year 2 Year 3 Year 4 R350 000 R750 000 R200 000 R170 000 Working capital amounting to R200 000 will be required at the start of the project. All the working capital will be recovered at the end of year 4. The expected scrap value of the non-current assets is R400 000. The cost of capital is 12%. Ignore taxes.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Study the information given and determine, based on its
Transcribed Image Text:Umdloti Ltd plans an investment in non-current assets costing R3 000 000. The non-current assets are
expected to have a four-year life, with the following net profits anticipated:
Year 1
Year 2
Year 3
Year 4
R350 000
R750 000
R200 000
R170 000
Working capital amounting to R200 000 will be required at the start of the project. All the working capital will be
recovered at the end of year 4. The expected scrap value of the non-current assets is R400 000. The cost of
capital is 12%. Ignore taxes.
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