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Investment Appraisal Answer

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Q1 an Predetermined OH Absorption rate

OH 130890
Last hors 1200 1.2
Labourhows 400 0.7
17,80
138217
76.1 Lit

Rod cost C D
D M 10.7 16 7
DL 11.2 1912
OH 07 76.1 4.2 76.1 53.27 093.12
75 17 127 22

Machine 13570 59 Setup


Setup
gtp 230

Purchase order 91520 44 order


naggers 2080

General 25800 15 Dent


factory Dire 1720

Product C D

Machine Setup 59 100 5900 59 1303 017670


Purchase order 44 12707055880
General today 1 8218 835640
4200 15 1440 0121600
Total OH 45 0
byproduct 85,15g
No units
GH of out 114.35 70 96

ads cost unit C D


DM 10.7 167
DL 11.2 79.2
OH 114 35 70 96
Total Cost 136 25 106 86

e Job Activity frequency Rate Cost

Setup 10 590
Orders 40 01760 Total OH
L Hours go 44 900 3250
Possible points to discuss
if
Change of
Customer
selling
reactions
price

Impact on competiveness of product in market


Accept any other valid point each valid point
one
3 for
Marks man

Q2 RunningEmp Reciepts Net Reciepts


cattily fpqiof.fm 900,0007
YI 682000 1200,000 518000
42 6820007 1260000 578000
43 6820007
1260000 578000
7320007 1323000 597000
5 30,000011732000 1323000 621000

Payback period Y
1900,000
518000 1382000
Yz 578000 s 804000 591000 12m
43 578000 226000 226000
Yu 591000 4.58m

4 58 months
3yr
aalii Accounting the rate of return

Netcoshflow Depreciation Profit Avg Net Profit


yo
41 518000 1680007 350000 2016000
42 578000 16800 0410000 5
43 578000 168000 410000 403200
YU 591000 168000 423oz
45 591000 1680007 0423000 AvgCap 1900,000 30000
2
9650000
ARR 403200 100 41 7890
965000

axii NPV
of the Project
Net Cashflow 12 D F Def
Yo 4900,000 1 1900 ooo
YI 518000 0.893 462574
42 578000 0 797 460666
43 578000 0.712 411563
Yy 597000 0.636 375876

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