# The total captal investment for the project is 18

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## The total captal investment for the project is 18

2018 569 Question 2 2 1 The total captal investment for the project is R 18 milion The working capital is R 3 million The fixed capital investment will be depreciated linearly over 10 years A savage value of 5% of the fixed capital investment is anticipated The capacity of the plant is 375 000 tons/day The seling pnce of the product is R 0 2/ton The fixed operating cost is estimated to be 10% of the fixed capital investment The vanable cost amounts to R 0 11/ton The plant operates for 320 days per year

If the tax rate is 40%, determine the after-tax ROI

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2 2 An existing plant consumes large amounts of water, which need to be treated after use It is proposed to retrofit the plant in order to reduce the water usage and subsequently the cost Three different designs have been proposed as shown in the table below

8 Total installed cost, \$ 400 000 Operating cost, \$/year20 000 600 000 720 000 35 000 40 000 155 000 245 000 293 000 An 18 % return is requred on any investment and assets are written orr treaty over 6 years Use the incremental returns method to decide which of the three options you would recommend

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The total captal investment for the project is 18

The total captal investment for the project is 18