c$)$ Stimulate sales by improving the quality of the product, which would increase the variable

cost of the unit by $ZMW15$ per umit

i$)$ For each proposal calculate :

The break$-$even point in umits in value terms $(6$ marks$)$

The number of umits required to be sold in order to meet the profit target of ZMW $20000$

$(2$ marks$)$

State which proposal you think should be adopted to rescue chiyeyeye enterprise? $(4$

marks$)$

ii$)$ The directors of chiyeyeye are comsidering purchasing a new machinery that would

improve the quality and productivity of furniture production. The initial investment

needed for the machinery is $ZMW120,000.$ The cost of capital is $12\%$ from CEEC

With a new machinery in place, the project is expected to generate the following cash flows,

ZMW $20000,ZMW30000,$ ZMW $50000,$ ZMW $50000,$ and $ZMW60000.$

Calculate he Payback period for the project

Calculate the Net present value for the project

Advice if the project should be accepted umder Net present value and payback period

to chiyeyeye Management?

Explain the advantages and weakness of using payback period as criteria for

$(2$ marks each $=8$ marks$)$

Total marks $20$

b$)$ Discuss any three sources of finance for chiyeyeye enterprise that are possible $(6$ marks$)$

c$)$ What factors should Chisehe take into accoumt when locating ber wholesale furmiture

manufacturing plant in Lusaka? $(4$ marks$)$