Includes finance, vehicle loans, inflation, interest. Short assignment

Plagiarism is stealing somebody’s intellectual property. It is pretending that someone else’s work is your own. Committing plagiarism is unacceptable to Damelin and will result in serious consequences for any person who is found guilty of plagiarism. How is plagiarism committed? i Cutting and pasting from electronic sources or copying from books, magazines, journals, etc. content, diagrams, tables, phrases & quotations in one’s own document. ii Copying from the work of another student iii Allowing a fellow student to copy you iv Using too many direct quotations v Rewriting someone else’s ideas in your own words (paraphrasing) without referencing the source. How can you avoid plagiarism? If you use any secondary sources from books or the Internet while completing your assignments, you need to reference the original source, otherwise, you will be accused of plagiarism and disciplinary action will be taken against you by the College. Caref ully and accurately acknowledge the source that you used to obtain information and ideas from. As you read, write down the details of the sources. Supply a list of references at the end of your essay, report or assignment You may talk to other people to help you work through the assignment, as long as the work you submit will be your own work and not an assignment completed for you by another person, or one that you have copied from the learning material. You are not allowed to copy verbatim (word -for -word) from the learning material and submit this as your own work. You are not allowed to use the same examples that have been used in the learning material and submit this as your own work. Declaration of Authenticity A critical aspect of any assignment is authenticity. Because you are completing much of the work for the assignments unsupervised, the examiner must be convinced that it is all your own work. For this reason, you must complete the Declaration of Authentici ty and have it countersigned by your manager, mentor or lecturer. The declaration of authenticity is a legal document, and if found that you have made a false declaration, then not only will your results be declared null and void, but you could also have criminal charges brought against you. It is not worth taking the ri sk! Please complete the declaration of authenticity below for all assignments: DECLARATION OF AUTHENTICITY I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Full Name & Surname ID number Hereby declare that the contents of this assignment are entirely my own work. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Signature Date Question 1 20 marks JD recently graduated from Damelin and is currently doing his internship. He wants to buy a Golf TDi (or similar) in five years’ time. The vehicle is currently valued at R280,000 but with inflationary expectations at 6% he expects the vehicle to cost somewhat more when he purchases the vehi cle. He wants to put down a deposit of 35% at purchase date and intends putting money aside towards the deposit. A bank is willing to offer him 8% pa compounded monthly on any savings. He expects that ABSA Vehicle Finance to offer him favourable terms of 1 1.5% pa compounded monthly over five years to cover his repayments. Required: 1) What amount does he expect to put aside each month to pay off the deposit? 2) What would his expected repayments be to pay off the loan? Question 2 20marks While vacationing in Knysna, John Kelley saw the vacation home of his dreams. It was listed with a sale price of R200,000. The only catch is that John is 40 years old and plans to continue working until he is 65. Still he believes that prices generally inc rease at the overall rate of inflation. John believes that he can earn 9% annually after taxes on his investments. He is willing to invest a fixed amount at the end of each of the next 25 years to fund the cash purchase of such a house. Required: 1) Inflatio n is expected to average 5% per year for the next 25 years. What will John’s dream house cost when he retires? 2) How much must John invest at the end of each of the next 25 years to be able to make the cash payment at retirement? 3) What if he invests at beginn ing of the period instead of end of period, would there be any differences in values? Question 3 20marks In exchange for a R20,000 payment today, a well -known company will allow you to choose one of the alternatives shown in the following table. Your opportunity cost is 11% Alternative Single amount A R28,500 at end of 3 years B R54,000 at end of 9 years C R160,000 at end of 20 years Required: 1) Find the value today of each alternative. 2) Are all the alternatives acceptable – i.e. worth R20,000 today? 3) Which alternative, if any, will you take? Question 4 40marks A firm wishes to undertake any or all of the below project. The firm’s required rate of return is 12 percent and the projected cash flow for each project is given below. Projects Year Zeta Omega 0 -R100 000 -R90 000 1 R35 000 R40 000 2 R25 000 R35 000 3 R15 000 -R10 000 4 R20 000 R15 000 5 R15 000 R12 000 6 R5 000 R15 000 As a Finance Manager in the making, what would you advise the firm with regard to these projects? Please provide your advice by responding to the following questions 1) For each project, c ompute the i. Discounted Payback Period (DPBP) ii. Profitability Index (PI) iii. Net Present Value (NPV) iv. Internal Rate of Return 2) Based on your understanding of the uses of the above technique s, which of th em provide s the most valuable outcome for decision making. 3) Given the results of your choice in “B” Which project should be undertaken if both are mutually independent and which should be undertaken if both are mutually exclusive? Explain why. 4) Suppose that a different firm also evaluates Project Zeta. If its required rate of return is 15 percent, should this firm purchase the project? No computations are need ed to answer this question.