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Fin3701 exam pack 2023

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FIN3701 EXAM PACK 2023 Stuvia.com - The study-notes marketplace Page 4 of 31 FIN3701 CONFIDENTIAL QUESTION 1 MAY/JUNE 2022 [10 marks] GoldStar Construction Ltd seeks to replace a grinding machine purchased two years ago for R76 000 with a new one. The existing grinding machine has a useful life of four years and can be sold today for R55 000 with removal costs of R4 000. The machine was being depreciated over a four-year straight-line period. The cost price of the new grinding machine is R80 000 and will be depreciated over its five year useful life using a straight line method. It will have no residual value and will be worth R0 at the end of its five year useful life. The use of the new grinding machine is expected to increase current assets to R30 000 and current liabilities to R80 000. GoldStar Construction is in the 40% tax bracket. REQUIRED: 1.1 Calculate the terminal cash flow from the use of the new grinding machine. Show all calculations. (10 marks) [TURN OVER] Downloaded by: reception59 | reception@nkbaynes.co.za Distribution of this document is illegal Want to earn R13,625 per year? Stuvia.com - The study-notes marketplace Page 5 of 31 FIN3701 CONFIDENTIAL MAY/JUNE 2022 [TURN OVER] Downloaded by: reception59 | reception@nkbaynes.co.za Distribution of this document is illegal Want to earn R13,625 per year? Stuvia.com - The study-notes marketplace Page 6 of 31 FIN3701 CONFIDENTIAL QUESTION 2 MAY/JUNE 2022 [12 marks] A firm with cost of capital of ...
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