QUESTION 1 [ 5 Marks] Darrel Solutions makes and sells computers. On 30 June 2019, the entity had 60 computers in inventory. The companys policy is to maintain a computer inventory of 15% of the following months sales. The sales forecast of the entity for second quarter of the year is: Month Quantity July 1 200 August 1 000 September 900 REQUIRED Calculate the projected production for July and August 2019.

QUESTION 2

[ 8 Marks ] Arsenal Ltd has decided to invest in equipment that costs R80 000 (excluding R10 000 installation costs). The equipment is to be depreciated on a straight-line basis over a five-year period. The following are the expected incremental increases in net operating profit (loss) after taxes (NOPAT) for the five-year life of the investment: YEAR R 1 15 000 2 11 000 3 9 000 4 6 000 5 (5 000) Calculate the operating cash flows for each of the five years.

QUESTION 3 [ 7 Marks ] Dephny Ltd expects to sell equipment used in an investment project for R400 000. The equipment, with a book value of R0, is sold at the end of the life of the project. The company is subject to a 30% tax rate. Net working capital worth R200 000 will be recovered.

REQUIRED: Calculate the terminal cash flow for the project.