Assignment 6: Present Value and Opportunity Cost

MODULE 6
Assignment 6
© 2017 Van Schaik. All Rights Reserved (not authorised for commercial use).

Name:
1. Instructions and guidelines (Read carefully)
Instructions
1. Insert your name and surname in the space provided above, as well as in the file name.
Save the file as: First name Surname Assignment 6 – e.g. Lilly Smith Assignment 6. NB!
Please ensure that you use the name that appears in your student profile on the Online
Campus (OLC).
2 Write all your answers in this document. There is an instruction that says, “Start writing
here” under each question. Please type your answer there.
3 Submit your assignment in Microsoft Word only. No other file types will be accepted.
4 Do not delete the plagiarism declaration or the assignment instructions and
guidelines. They must remain on your assignment when you submit.
PLEASE NOTE: Plagiarism cases will be penalised according to the Head tutor’s and
GetSmarter's discretion.
IMPORTANT NOTICE: Please ensure that you have checked your course calendar for the due
date for this assignment. This calendar is available on the OLC and has also been sent to you
by your Course Coach.
Guidelines
1 There are six pages and three questions in this assignment.
2 Make sure that you have carefully read and fully understood the questions before
answering them. Answer the questions fully but concisely and as directly as possible.
Follow all specific instructions for individual questions (e. g. “list”, “in point form”).
3 Answer all questions in your own words. Do not copy any text from the notes, readings
or other sources. The assignment must be your own work only.
Plagiarism declaration:
1. I know that plagiarism is wrong. Plagiarism is to use another’s work and pretend that
it is one’s own.
2. This assignment is my own work.
3. I have not allowed, and will not allow, anyone to copy my work with the intention of
passing it off as his or her own work.
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Website: www.getsmarter.com | Email: [e-mail]
© 2016 UCT / GetSmarter All Rights Reserved (not authorised for commercial use)
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4. I acknowledge that copying someone else’s assignment (or part of it) is wrong, and
declare that my assignments are my own work.
2. Mark allocation
Each question receives a mark allocation. However, you will only receive a final percentage
mark and will not be given individual marks for each question. The mark allocation is there
to show you the weighting and length of each question.
Question 1: Present value and opportunity cost 11
Question 2: Retirement savings 20
Question 3: Repayments 19
Total: 50
3. Assignment questions
Assignment instructions
Complete the entire assignment in this document. Make sure you have read Modules 1 to 6
before completing this assignment.
Financial calculators are not allowed for this assignment – students are required to make use
of the tables (A-D) at the end of the Module 6 notes. Make sure that you show all your
working when calculations are required.
Question 1
JJ Industries is in the business of manufacturing large yachts. They have an agreement with
one of their biggest customers that they will pay off their account of R18.5 million over the
next three years, with JJ Industries receiving the payments according to the following
schedule:
End of year 1: R4,000,000
End of year 2: R6,500,000
End of year 3: R8,000,000
The business has access to a market-linked investment account, which earns them 11% a
year.
1.1 Using the tables, what PVIFs would one use to calculate the present values of each of the
three cash inflows?
Start writing here: PVIF for year 1 is 0.901, year 2 is 0.812 and year 3 is 0.731.
Tel: [phone] | Fax: [phone]
Website: www.getsmarter.com | Email: [e-mail]
© 2016 UCT / GetSmarter All Rights Reserved (not authorised for commercial use)
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