Answered step by step
Verified Expert Solution
Question
...
1 Approved Answer
QUESTION 1 MARKS ] You are a senior consultant at FENG Advisory and have been assigned to a project team that will assist Kalahari Off
QUESTION MARKS You are a senior consultant at FENG Advisory and have been assigned to a project team that will assist Kalahari OffRoad & Trailers Kalahari Kalahari mainly manufactures caravans and offroad trailers suitable for offroad and rugged terrain travel, but also manufactures and retails offroad related leisure accessories, including travelling fridgesfreezers solar panels and camping equipment. The company is based in Southland, where it currently has one manufacturing facility in Capital City, the country's largest city. The Southland currency is the Southland dollar S$ Since its foundation some decades ago, Kalahari's main focus has always been the local Southland market, occasionally exporting a small number of its caravans or trailers to individuals who made use of their products while visiting the country as international tourists. In recent years, due to the company's longstanding reputation for manufacturing innovative and highquality products, and the increasing popularity of offroad leisure and travel, the international demand for its caravans and trailers has grown multiple fold in particular from Northland, a large and developed country wellknown for its deeprooted offroad leisure tourism industry. Kalahari is now considering establishing an additional manufacturing plant in South City, a large industrial and port city within Southland. If approved, the South City plant will focus mainly on manufacturing trailers and caravan for exporting to Northland, but some of the products will be sold locally. In considering the funding application for the South City project, INGB Bankwho is willing to provide a loan of up to of the initial capital development cost requested Kalahari to submit a financial feasibility of the project. You have been asked to determine the financial feasibility of the project, based on the information provided below and calculating the project's net present value, internal rate of return and the simple payback period. The South City project team at Kalahari provided the following memorandum with additional information regarding the project: To: FENG Advisory From: Kalahari OffRoad & Trailers Date: May Re: Proposed establishment of a manufacturing facility in South City, Southland, for mainly export purposes. Background Kalahari OffRoad & Trailers has identified a manufacturing facility in the industrial zone of South City, close to the harbour and international airport, which it will be able to lease for four years from January to December with the option to buy the property from the current owner at the end of the lease term. If the project is approved, we will immediately commence with site establishment at the factory facility including installation of plant and equipment, air conditioning and lighting with operations at the South City site commencing January The facility will have an annual capacity to manufacture 'units' of the company's toptier caravan the Kalahari Caracal of which the bulk will be exported.Initial costs, revenue and operational expenses base scenario As requested, you will find herewith additional information regarding the South City project base scenario:Question continued Memorandum from Kalahari OffRoad & Trailers Additional notes To be considered successful, Kalahari require a return of on investments which is equal to the company's weighted average cost of capital The current corporate income tax rate in Southland is and is expected to remain unchanged for the duration of the project to The loan from INGB Bank carries interest of per annum, capitalised monthly. The loan is fully repayable from January onwards, in equal monthly instalments over a period of three years the first payment due on January Alternative scenario Further to the base scenario, we request the consideration of the following Income variables to the current all other estimates indicated in the base scenario remain the same: Percentage of units exported: Sales price per Kalahari Caracal unit for export : N Anticipated Nf:S$ exchange rate equivalent of N: onwards: The S $ weakens by per year against the REQUIRED TOTAL: MARKS
QUESTION
MARKS
You are a senior consultant at FENG Advisory and have been assigned to a project team that will
assist Kalahari OffRoad & Trailers Kalahari Kalahari mainly manufactures caravans and offroad
trailers suitable for offroad and rugged terrain travel, but also manufactures and retails offroad
related leisure accessories, including travelling fridgesfreezers solar panels and camping
equipment. The company is based in Southland, where it currently has one manufacturing facility in
Capital City, the country's largest city. The Southland currency is the Southland dollar S$ Since its
foundation some decades ago, Kalahari's main focus has always been the local Southland market,
occasionally exporting a small number of its caravans or trailers to individuals who made use of their
products while visiting the country as international tourists.
In recent years, due to the company's longstanding reputation for manufacturing innovative and
highquality products, and the increasing popularity of offroad leisure and travel, the international
demand for its caravans and trailers has grown multiple fold in particular from Northland, a large
and developed country wellknown for its deeprooted offroad leisure tourism industry. Kalahari is
now considering establishing an additional manufacturing plant in South City, a large industrial and
port city within Southland. If approved, the South City plant will focus mainly on manufacturing trailers
and caravan for exporting to Northland, but some of the products will be sold locally.
In considering the funding application for the South City project, INGB Bankwho is willing to provide
a loan of up to of the initial capital development cost requested Kalahari to submit a financial
feasibility of the project. You have been asked to determine the financial feasibility of the project,
based on the information provided below and calculating the project's net present value, internal rate
of return and the simple payback period.
The South City project team at Kalahari provided the following memorandum with additional
information regarding the project:
To: FENG Advisory
From: Kalahari OffRoad & Trailers
Date: May
Re: Proposed establishment of a manufacturing facility in South City, Southland, for mainly
export purposes.
Background
Kalahari OffRoad & Trailers has identified a manufacturing facility in the industrial zone of South
City, close to the harbour and international airport, which it will be able to lease for four years from
January to December with the option to buy the property from the current owner
at the end of the lease term.
If the project is approved, we will immediately commence with site establishment at the
factory facility including installation of plant and equipment, air conditioning and lighting with
operations at the South City site commencing January The facility will have an annual
capacity to manufacture 'units' of the company's toptier caravan the Kalahari Caracal of
which the bulk will be exported.Initial costs, revenue and operational expenses base scenario
As requested, you will find herewith additional information regarding the South City project base
scenario:Question continued Memorandum from Kalahari OffRoad & Trailers
Additional notes
To be considered successful, Kalahari require a return of on investments which is equal to
the company's weighted average cost of capital
The current corporate income tax rate in Southland is and is expected to remain unchanged
for the duration of the project to
The loan from INGB Bank carries interest of per annum, capitalised monthly. The loan is
fully repayable from January onwards, in equal monthly instalments over a period of three
years the first payment due on January
Alternative scenario
Further to the base scenario, we request the consideration of the following Income variables to the
current all other estimates indicated in the base scenario remain the same:
Percentage of units exported:
Sales price per Kalahari Caracal unit for export : N
Anticipated Nf:S$ exchange rate equivalent of N: onwards: The S $ weakens by per
year against the
REQUIRED
TOTAL: MARKS
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started