Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Sentra Limited is a public company whose headquarters is in Johannesburg, South Africa. It is a manufacturer of automotive products, with a promise to its
Sentra Limited is a public company whose headquarters is in Johannesburg, South Africa. It is a
manufacturer of automotive products, with a promise to its customers of high quality at affordable prices.
It commenced operations on January with authorised share capital of ordinary shares of
which have been issued at R per share.
At the end of the fixed assets at carrying value totalled R inventories amounted to
R R was owed by trade debtors, cash in the bank amounted to R the
accumulated undistributed profits amounted to R and R was owed to the trade creditors.
The sales of Sentra Limited for amounted to R
The following projections and proposals were made for :
The sales revenue is expected to increase to R The aftertax return on sales is estimated at
The directors are expected to propose dividends of cents per share at the end of the year
payable during A vehicle with a cost price of R which was damaged in an accident during
December and subsequently repaired, is expected to be traded in at a loss of R during the
last quarter of for a new vehicle with a cost price of R The accumulated depreciation of the
previously damaged vehicle on the date of the tradein is expected to be R Depreciation for the
year is estimated at R ordinary shares are expected to be issued during March at
R per share. Inventories, accounts receivable and accounts payable are to be calculated using the
percentageofsales method. The amount of cash and cash equivalents must be determined balancing
figure
Sentra Limited has identified a new machine that it is considering for purchase during The machine
would cost R excluding installation costs of R The machine is expected to have a
useful life of five years and depreciation per year is estimated at R It is expected that the new
machine would generate cash receipts of R per year and its annual cash outflows would total
R At the end of year the machine would require a major overhaul costing R cash not
included in the figures above A scrap value of Rnot included in the figures above is
anticipated. The cost of capital is
QUESTIONS
Prepare the Pro Forma Statement of Financial Position as at December
Ignore the investment opportunity. marks
Refer to the investment opportunity for the purchase of a new machine and
calculate the following. Ignore taxes.
Accounting Rate of Return on average investment expressed to two decimal
places marks
Net Present Value. Use only present value table discount factors from the module
guide to calculate the present values of the net cash flows. marks
Internal Rate of Return expressed to two decimal places if the net cash flows
generated by the machine are R per year for five years and the scrap value
is R Your answer must include two net present value calculations using
consecutive ratespercentages and interpolation. Recommended: Use present
value table for R per year and present value table for R marks
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started