UNIVERSITY OF SOUTH AFRICA (UNISA)
College of Economic and Management Sciences
Department of Finance, Risk Management and Banking
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FIN3701
Financial Management III
Assignment 1 – Semester 1, 2026
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Module Code: FIN3701
Module Name: Financial Management III
Assignment: Assignment 1
Unique Number: 224276
Semester: Semester 1, 2026
Due Date: 30 March 2026
Institution: University of South Africa
Faculty: College of Economic and Manage-
ment Sciences
Submitted in partial fulfilment of the requirements for FIN3701 – Financial Management III
,UNISA | FIN3701 Assignment 1 – Semester 1, 2026
Contents
1 Question 1: Bottling Ltd – Capital Budgeting Analysis 4
1.1 1.1 Initial Investment Required . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.2 1.2 Operating Cash Inflows for Year 1 and Year 2 . . . . . . . . . . . . . . . . . 6
1.3 1.3 Tax Effect on Terminal Cash Flow from Disposal . . . . . . . . . . . . . . . 8
1.4 1.4 Net Present Value (NPV) / IRR of the Investment . . . . . . . . . . . . . . 10
2 Question 2: Mamphela Mining Corporation – Share Valuation 12
2.1 2.1 Current Price of Mamphela Mining Corporation Ordinary Share . . . . . . 12
2.2 2.2 Should Marombo Purchase the Shares? . . . . . . . . . . . . . . . . . . . . 13
3 Question 3: Raging Volts – WACC and Capital Structure 15
3.1 3.1 Component Costs of Capital . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.2 3.2 WACC, Break Points – Current Structure (80% Equity, 20% Debt) . . . . . 15
3.3 3.3 WACC, Break Points – Proposed Structure (60% Debt, 40% Equity) . . . . 16
3.4 3.4 Number of Shares – Current Structure . . . . . . . . . . . . . . . . . . . . . 17
3.5 3.5 Number of Shares – Proposed Structure . . . . . . . . . . . . . . . . . . . . 17
4 Question 4: Mphoreng Industries – Replacement Decision 18
4.1 4.1 Book Value of Existing Machine . . . . . . . . . . . . . . . . . . . . . . . . 18
4.2 4.2 Tax Implication from Sale of Existing Machine . . . . . . . . . . . . . . . . 18
4.3 4.3 After-Tax Proceeds from Sale of Existing Machine . . . . . . . . . . . . . . 19
4.4 4.4 Initial Investment for Replacement . . . . . . . . . . . . . . . . . . . . . . . 19
5 Question 5: Projects X and Y – Risk Concepts in Capital Budgeting 20
6 Question 6: Tyres Manufacturers – Financing Forms and Component Costs 22
6.1 6.1 Forms and Amounts of New Financing . . . . . . . . . . . . . . . . . . . . . 22
6.2 6.2 Component Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7 Question 7: Evans Industries – NPV and Annualised NPV (ANPV) 24
7.1 7.1 NPV of Each Machine (Cost of Capital = 12%) . . . . . . . . . . . . . . . . 24
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, UNISA | FIN3701 Assignment 1 – Semester 1, 2026
7.2 7.2 Annualised NPV (ANPV) of Each Machine . . . . . . . . . . . . . . . . . . 25
7.3 7.3 Which Machine Should the Firm Purchase? . . . . . . . . . . . . . . . . . . 25
8 Question 8: Projects M and N – ANPV Comparison 27
Reference List 28
Page 3 of 28
College of Economic and Management Sciences
Department of Finance, Risk Management and Banking
⋄⋄⋄ ⋄⋄⋄
FIN3701
Financial Management III
Assignment 1 – Semester 1, 2026
⋄⋄⋄ ⋄⋄⋄
Module Code: FIN3701
Module Name: Financial Management III
Assignment: Assignment 1
Unique Number: 224276
Semester: Semester 1, 2026
Due Date: 30 March 2026
Institution: University of South Africa
Faculty: College of Economic and Manage-
ment Sciences
Submitted in partial fulfilment of the requirements for FIN3701 – Financial Management III
,UNISA | FIN3701 Assignment 1 – Semester 1, 2026
Contents
1 Question 1: Bottling Ltd – Capital Budgeting Analysis 4
1.1 1.1 Initial Investment Required . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.2 1.2 Operating Cash Inflows for Year 1 and Year 2 . . . . . . . . . . . . . . . . . 6
1.3 1.3 Tax Effect on Terminal Cash Flow from Disposal . . . . . . . . . . . . . . . 8
1.4 1.4 Net Present Value (NPV) / IRR of the Investment . . . . . . . . . . . . . . 10
2 Question 2: Mamphela Mining Corporation – Share Valuation 12
2.1 2.1 Current Price of Mamphela Mining Corporation Ordinary Share . . . . . . 12
2.2 2.2 Should Marombo Purchase the Shares? . . . . . . . . . . . . . . . . . . . . 13
3 Question 3: Raging Volts – WACC and Capital Structure 15
3.1 3.1 Component Costs of Capital . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.2 3.2 WACC, Break Points – Current Structure (80% Equity, 20% Debt) . . . . . 15
3.3 3.3 WACC, Break Points – Proposed Structure (60% Debt, 40% Equity) . . . . 16
3.4 3.4 Number of Shares – Current Structure . . . . . . . . . . . . . . . . . . . . . 17
3.5 3.5 Number of Shares – Proposed Structure . . . . . . . . . . . . . . . . . . . . 17
4 Question 4: Mphoreng Industries – Replacement Decision 18
4.1 4.1 Book Value of Existing Machine . . . . . . . . . . . . . . . . . . . . . . . . 18
4.2 4.2 Tax Implication from Sale of Existing Machine . . . . . . . . . . . . . . . . 18
4.3 4.3 After-Tax Proceeds from Sale of Existing Machine . . . . . . . . . . . . . . 19
4.4 4.4 Initial Investment for Replacement . . . . . . . . . . . . . . . . . . . . . . . 19
5 Question 5: Projects X and Y – Risk Concepts in Capital Budgeting 20
6 Question 6: Tyres Manufacturers – Financing Forms and Component Costs 22
6.1 6.1 Forms and Amounts of New Financing . . . . . . . . . . . . . . . . . . . . . 22
6.2 6.2 Component Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7 Question 7: Evans Industries – NPV and Annualised NPV (ANPV) 24
7.1 7.1 NPV of Each Machine (Cost of Capital = 12%) . . . . . . . . . . . . . . . . 24
Page 2 of 28
, UNISA | FIN3701 Assignment 1 – Semester 1, 2026
7.2 7.2 Annualised NPV (ANPV) of Each Machine . . . . . . . . . . . . . . . . . . 25
7.3 7.3 Which Machine Should the Firm Purchase? . . . . . . . . . . . . . . . . . . 25
8 Question 8: Projects M and N – ANPV Comparison 27
Reference List 28
Page 3 of 28
