hambili Ltd is in the pharmaceutical industry sector and has been expanding in the recent past due to a change in its strategic direction from regulated medicines to supplements and homeopathic remedies. The company has recently identified a project it wants you to evaluate and give recommendations on whether to reject or accept, among other things. You are provided with the following tabulated financial and additional information: Details Year 1 Year 2 Year 3 Year 4 Year 5 R’000 R’000 R’000 R’000 R’000 Sales 36,750 54,023 61,586 69,770 70,451 Materials 5,885 9,075 11,979 14,714 14,495 Labour 11,770 18,150 23,958 30,746 28,989 Other variable overheads 525 662 752 851 957 Fixed overheads 5,250 5,513 5,788 6,078 6,381 Other operating costs 3,120 3,353 3,600 3,978 4,015
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
Phambili Ltd is in the pharmaceutical industry sector and has been expanding in the recent past due to a change in its strategic direction from regulated medicines to supplements and homeopathic remedies. The company has recently identified a project it wants you to evaluate and give recommendations on whether to reject or accept, among other things. You are provided with the following tabulated financial and additional information:
| Details | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
| R’000 | R’000 | R’000 | R’000 | R’000 | |
| Sales | 36,750 | 54,023 | 61,586 | 69,770 | 70,451 |
| Materials | 5,885 | 9,075 | 11,979 | 14,714 | 14,495 |
| Labour | 11,770 | 18,150 | 23,958 | 30,746 | 28,989 |
| Other variable overheads | 525 | 662 | 752 | 851 | 957 |
| Fixed overheads | 5,250 | 5,513 | 5,788 | 6,078 | 6,381 |
| Other operating costs | 3,120 | 3,353 | 3,600 | 3,978 | 4,015 |
Additional information:
- The tax rate is 28% and is payablein the year profits are made;
- The company is financedby 75% equity and 25% debt, with market values of R75-million and R25-million respectively. The company has an equity beta of 1.2. The rate on South African Treasury bills is 5% and considered to have no risk. The market risk premium is 7.5%. The company’s after-tax cost of debt is 6%;
- Profits are similar to cash flowsfor the purposes of this project evaluation; and
- All receipts and payments arise at the end of the year to which they relate except for the project’s initial outlay of R30-million, which is paid at the beginning of the project (ie, immediately).
Given the information above, calculate the profits for the periods and weighted average cost of capital
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