QUESTION 3 VP Manufacturers is considering renovating their offices at their Durban head office. (40 Marks) 3.1 Use the generated information to calculate the NPV of the project, to decide whether to go ahead with the project. (20 Marks) Investment required Expected economic lifetime Minimum required rate of return R200 000 5 years. 10% Net annual cash inflows 1st year 2nd year 3rd year R40 000 R100 000 R90 000 R40 000 4th year 5th year R30 000 3.2 VP Manufacturers has decided to go ahead with the project. The following activities has been determined for the office renovation project. Construct a network diagram (AON) to create a graphical description of the operations and their relationship to each other. Identity the critical path for the project. Task/Number Duration (Days) Predecessors A 12 B 8 A C 4 A D 7 C E 6 B. D F 7 E (20 Marks) QUESTION 4 (20 Marks) There is a need for an organisation to manage its human, cost, and technological resources effectively. Therefore, project managers should ensure that the project environment is managed. Examine the pre- requisites for managing the environmental plan for a project of your choice.

A company used a 14% nominal discount rate to evaluate a new project. However, their advisor said that the normal discount rate for this industry is 12% but because of the different characteristics of the market, the higher discount rate is appropriate.   Question: Should the company use a different discount rate from other companies in that industry? If so, why, and what discount rate should they use?   (Hint: This is a theory question. It is required to mention systematic risk and rate of return. Which rate will systematic risk be close to?)

The Role of Income Taxes For the most recent year, Triad Company had fixed costs of $240,000and variable costs of 75% of total sales revenue, earned $70,000 of net income after taxes, and anincome tax rate of 35%.Required Determine:1. Before-tax income.2. Total contribution margin.3. Total sales.4. Breakeven point in dollar sales

QUESTION ONE(a) Mr. Sak is interested in developing and marketing a new drug. The cost of extensiveresearch to develop the drug would be 100,000. The manager of research programme saidthat there is 60% chance that the drug will be developed successfully. The market potentialis assessed as follows with present value of profit:Market conditions Probability Present value of profits.Large market potential 0.1 500,000Moderate market potential 0.6 220,000Low market potential 0.3 80,000The present value figures do not include the cost of research. While Mr. Sakala wasconsidering this proposal, another similar proposal came up which also required theinvestment of 100,000. The present value of profit for the second proposal was 120,000.The return on the investment in the second proposal is almost certain.i. Draw a decision tree for Mr. Sak indicating all choices and eventsii. What decision Mr. Sak should take regarding the investment of 100,000?iii. If Mr. Sak is a risk averter, should he…