document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1206251>Question 1206251</A>: <I><SPAN STYLE=\"word-break: break-all;\"> A company is considering implementing an investment opportunity in Dodoma. To identify this <BR>\n" );
document.write( "opportunity, the company had spent Tshs. 60 million in Research and development. It plans to <BR>\n" );
document.write( "carry out the project, which will involve spending Tshs. 800 million to pay for the acquisition of <BR>\n" );
document.write( "plant and machinery. The plant and machinery will be acquired from Dar es Salaam and will have <BR>\n" );
document.write( "to be shipped to Dodoma at a cost of Tshs 50 million while installation and commissioning cost is <BR>\n" );
document.write( "estimated at Tshs. 150 million. The company will also incur a net working capital investment of <BR>\n" );
document.write( "Tshs. 200 million, initially. <BR>\n" );
document.write( "The project will have a useful life of five (5) years, at the end of which the plant and equipment <BR>\n" );
document.write( "will be sold off and it is estimated to fetch Tshs. 300 million. If the project is successfully launched, <BR>\n" );
document.write( "it will contribute an additional annual cash flow of Tshs. 1,200 million. The company will also <BR>\n" );
document.write( "spend annually Tshs. 800 million in operating costs other than depreciation, interest and tax. <BR>\n" );
document.write( "Furthermore, the project will need an injection of Tshs. 150 million as additional working capital <BR>\n" );
document.write( "at the end of year 2. <BR>\n" );
document.write( "The effective tax rate is 30 percent and it is not expected to change over the project’s life. Plant <BR>\n" );
document.write( "and machinery will be depreciated at a rate of 25 percent using a written down value method. <BR>\n" );
document.write( "(a)<BR>\n" );
document.write( "Using the Net Present Value appraisal method, evaluate the plausibility of the project. <BR>\n" );
document.write( "Investors in a similar project demands a return on investment of 15 percent (b) At what <BR>\n" );
document.write( "rate would you change your position on the project and why? <BR>\n" );
document.write( "(c)<BR>\n" );
document.write( "What values would you post in the company’s books of accounts for plant and machinery <BR>\n" );
document.write( "each year beginning from year zero (0)?  </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #843577 by </B><A HREF=/tutors/aboutme.mpl?userid=ikleyn><B>ikleyn(52781)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=ikleyn><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=ikleyn><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=843577\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> .\r<BR>\n" );
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document.write( "Hello,\r<BR>\n" );
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document.write( "this forum is intended to help shcool students in learning Math and in solving<BR>\n" );
document.write( "their Math problems.\r<BR>\n" );
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document.write( "We do not make research in Finance.\r<BR>\n" );
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document.write( "Sometimes, we explain students how to solve the basic problems in Finance, but only in that cases,<BR>\n" );
document.write( "when they are covered by the standard course of Mathematics (when they are part of Mathematics).\r<BR>\n" );
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document.write( "This problem is deeply Finance problem and is far from our specialty/specialization.\r<BR>\n" );
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document.write( "For your request, please find another, more appropriate web-site/forum/platform.\r<BR>\n" );
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document.write( "Have a nice day.\r<BR>\n" );
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document.write( " </SPAN>\n" );
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