1) Money (2+10+3+10 25 Marks) a) Time Value of Money. In 15 years' time you want to have $16,000 saved. Assuming an investment rate of 2.5%, how much would you need to invest now? b) Present Value. You make an investment of $250,000 in a fleet of hire cars. Your annual receipts are $55,000 and disbursements are $20,000. At the beginning of year 3 you invest an additional $100,000 in your car fleet. This gives you additional annual receipts of $20,000 and additional disbursements of $10,000 over the existing figures. After five years you expect to sell the whole fleet for a residual value of $180,000. Assuming a discount rate of 5%, what is the net present value for this business? As a whole, is it an acceptable investment? c) What is the internal rate of return for the following cash flow scenario? Year 1 = $128,000 expenditure: Year 2 = $36,000 income; Year 3 = $42,000 income; Year 4 = $21,000 income; Year 5 = $45,000 income; Year 6 = $12,000 income. If your MARR is 7.2%, is this an attractive rate of return? d) Make a list of the fixed and of variable costs you think would be incurred in running a bakery in a suburban shopping centre What is the meaning of "gross margin"? Three bakers run the shop for six days each week on an 8-hour shift each person per day. Their total fixed costs are $4,800 pw and their current variable costs total $3,000 pw. At present, they produce 7,400 loaves pw but sell only 7,000 pw, with the unsold loaves given to a charity at the end of each day, before they go stale. What selling price do they need to set per loaf sold to break even? What price would they need to charge if they set their gross margins at 25%, what is their labour productivity in loaves produced/hour worked and, at the 25% gross margin, in $ earnt/hour worked? 1) Money (2+10+3+10 25 Marks) a) Time Value of Money. In 15 years' time you want to have $16,000 saved. Assuming an investment rate of 2.5%, how much would you need to invest now? b) Present Value. You make an investment of $250,000 in a fleet of hire cars. Your annual receipts are $55,000 and disbursements are $20,000. At the beginning of year 3 you invest an additional $100,000 in your car fleet. This gives you additional annual receipts of $20,000 and additional disbursements of $10,000 over the existing figures. After five years you expect to sell the whole fleet for a residual value of $180,000. Assuming a discount rate of 5%, what is the net present value for this business? As a whole, is it an acceptable investment? c) What is the internal rate of return for the following cash flow scenario? Year 1 = $128,000 expenditure: Year 2 = $36,000 income; Year 3 = $42,000 income; Year 4 = $21,000 income; Year 5 = $45,000 income; Year 6 = $12,000 income. If your MARR is 7.2%, is this an attractive rate of return? d) Make a list of the fixed and of variable costs you think would be incurred in running a bakery in a suburban shopping centre What is the meaning of "gross margin"? Three bakers run the shop for six days each week on an 8-hour shift each person per day. Their total fixed costs are $4,800 pw and their current variable costs total $3,000 pw. At present, they produce 7,400 loaves pw but sell only 7,000 pw, with the unsold loaves given to a charity at the end of each day, before they go stale. What selling price do they need to set per loaf sold to break even? What price would they need to charge if they set their gross margins at 25%, what is their labour productivity in loaves produced/hour worked and, at the 25% gross margin, in $ earnt/hour worked