QUESTION 1 (25 Marks) Information ABC Company is a manufacturer of widgets. The company has provided the following financial information for the year 2023: Required: Calculate the following breakeven and profit-related metrics, providing both the formula and the calculation: 1.1 Breakeven Quantity (in units). (4 Marks) 1.2 Breakeven Value (in rands). (4 Marks) 1.3 Margin of Safety (in rands and percentage). (8 Marks) 1.4 Number of Sales Units Required to Achieve a Profit of R15,000. (5 Marks) 1.5 Calculate the new breakeven quantity if the selling price increases to R12 while other factors remain the (4 Marks) same. INFORMATION The following information relates to two projects under consideration by CRMP Limited: The company estimates that its cost of capital is 13%. REQUIRED Study the information provided below and answer the following questions: 2.1 Calculate the Payback Period of both projects (answers expressed in years, months and days.) Which (7 Marks) project would you choose on the basis of payback period? Why? 2.2 Calculate the Accounting Rate of Return for both projects (answer expressed to two decimal places). (6 Marks) 2.3 Calculate the Net Present Value for both projects. (Round off amounts to the nearest Rand.) (6 Marks) 2.4 Based on your calculations from 2.12.3, which project should CRMP Limited choose? Why? (2 Marks) 2.5 Explain the concept of the "Internal Rate of Retum (IRR)" in the context of financial decision-making. (4 Marks) Describe the significance of IRR when evaluating investment projects. Company XYZ is a manufacturing company. You have been provided with the following financial information for the year 2023: Required: Calculate and analyze the following financial ratios, providing both the calculation and an explanation of what each ratio measures. In addition, provide insights into Company XYZ's financial performance based on your calculations. Debt-to-Equity Ratio. Gross Profit Margin. Operating Profit Margin Net Proft Margin. Return on Assets (ROA). Return on Equity (ROE). Case Study - Retirement Planning John is a 30 -year-old professional planning for his retirement. He wants to assess the financial impact of different investment scenarios. He's considering investing a lump sum amount and wants to compare two options: Option A: Invest R50,000 today for 30 years. Option B: Invest R5,000 per year for 30 years. Required: 4.1 John's expected annual interest rate is 6%. Help John evaluate both investment options using present (18 Marks) value (PV) and future value (FV) calculations. Calculate and compare the following for each option: The Future Value (FV) of the investment at the end of 30 years. . The Present Value (PV) of the investment (f applicable). 4.2 You plan to buy a house worth R500,000, and you currently have R100,000 saved for this goal. If you can (7 Marks) invest your savings at an annual interest rate of 6%, how long will it take for your savings to grow to the required R500,000 for purchasing the house? END OF PAPER
