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FIN3701 Assignment 2 (COMPLETE ANSWERS) Semester 2 2026 - DUE 8 September 2026

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Exam study book Financial & Managerial Accounting of Jan Williams, Sue Haka, Mark Bettner, Joseph Carcello - ISBN: 9780073526997

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FIN3701
Assignment 2 Semester 2 2026
Unique number:
Due date: 8 September 2026


QUESTION 1

QUESTION 1.1

Break point of debt = R160 .40 = R400 000

Break point of equity = R425 .60 = R708 333

Range R0 – R400 000

Cost of long-term debt (YTM)

Calculator input Value

FV R1 000

PV R930

PMT R80

N 10

I/YR 9.10%

, QUESTION 1

QUESTION 1.1

Break point of debt = R160 .40 = R400 000

Break point of equity = R425 .60 = R708 333

Range R0 – R400 000

Cost of long-term debt (YTM)

Calculator input Value

FV R1 000

PV R930

PMT R80

N 10

I/YR 9.10%

Net proceeds = R1 000(1 − 0.05) − R20 = R930

After-tax cost of debt = 9.10% × (1 − 0.30) = 6.37%

Cost of retained earnings = [R10(1 + 0.03) / R90] + 0.03 = 14.44%

WACC = (6.37% × 0.40) + (14.44% × 0.60) = 11.21%




Range R400 001 – R708 333

After-tax cost of additional debt = 10.00%

Cost of retained earnings = 14.44%

WACC = (10.00% × 0.40) + (14.44% × 0.60) = 12.66%
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Jan Williams, Sue Haka, Mark Bettner, Joseph Carcello Financial & Managerial Accounting
Publisher: 2009 ISBN: 9780073526997 Edition: Unknown

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