Mc2602 Assignment 1 – Semester 1 (2021)
Question Calculation/References
1. 4 All the elements are listed on page 8 (study guide 1)
2. 2 See page 13 of study guide 1 (Figure 2.1: Classification of stakeholders)
3. 3 See FIGURE 3.1: An overview of factors in the business environment influencing
strategy development – Page 19 Study guide 1.
4. 4 See TABLE 4.4: Factors determining the strength of rivalry – Page 37 study guide 1
5. 4 See page 55 – Study guide 1
6. 3 Financial management is defined as “The identification of possible strategies
capable of maximising an organisation’s net present value, the allocation of scarce
capital resources among the competing opportunities and the implementation and
monitoring of the chosen strategy so as to achieve stated objectives” (CIMA Official
Terminology, 2005). (page 59 – Study guide 1)
7. 2 “Cradle to the grave” in business refers to the lifecycle of a product or business
process – from beginning (birth) to the end (grave).
8. 4 30 000 x (100% + 1 % x 4 x 6) = R37 200
9. 3 183,30−165,25
6% + = 6,75%
207,54−183,30
10. 1
11. 2 PV = Annuity x PV factor of R1 per period (TABLE B)
Annuity = PV/ PV factor of R1 per period (TABLE B)
12% biannually = 6%
4 years biannually = 4 x 2 = 8 payments
Using table for Pv of an annuity @6% for 8 periods, factor is 6,210
Annity = 450 000/6,210 = R72 463 (difference due to rounding, mathematical
formula or financial calculator gives a more approximate answer).
12. 1 A primary market is for raising new capital whereas a secondary is for trading in
previously issued instruments (See TABLE 10.3: The two main functions of capital
markets – Page 152 in study guide 1).
Option 1 is not true – bonds and equity instruments are initially sold to investors
therefore it refers to the primary market. All other options refer to the secondary
market.
13. 4
10 300 000
(10 300 000+1 150 000)
x 100% = 89,96%
14. 2 Cost of equity = 8,5% + 1,8 (16% - 8,5%) = 22%
15. 3 Cost of equity = D1/Po + g = (2,40 x 1,05)/14,82 + 0,05 = 22%
16. 3 Market value of debentures
i = 11%
I = 2 000 x 12% = R240 (coupon payment)
R = R2 000
Question Calculation/References
1. 4 All the elements are listed on page 8 (study guide 1)
2. 2 See page 13 of study guide 1 (Figure 2.1: Classification of stakeholders)
3. 3 See FIGURE 3.1: An overview of factors in the business environment influencing
strategy development – Page 19 Study guide 1.
4. 4 See TABLE 4.4: Factors determining the strength of rivalry – Page 37 study guide 1
5. 4 See page 55 – Study guide 1
6. 3 Financial management is defined as “The identification of possible strategies
capable of maximising an organisation’s net present value, the allocation of scarce
capital resources among the competing opportunities and the implementation and
monitoring of the chosen strategy so as to achieve stated objectives” (CIMA Official
Terminology, 2005). (page 59 – Study guide 1)
7. 2 “Cradle to the grave” in business refers to the lifecycle of a product or business
process – from beginning (birth) to the end (grave).
8. 4 30 000 x (100% + 1 % x 4 x 6) = R37 200
9. 3 183,30−165,25
6% + = 6,75%
207,54−183,30
10. 1
11. 2 PV = Annuity x PV factor of R1 per period (TABLE B)
Annuity = PV/ PV factor of R1 per period (TABLE B)
12% biannually = 6%
4 years biannually = 4 x 2 = 8 payments
Using table for Pv of an annuity @6% for 8 periods, factor is 6,210
Annity = 450 000/6,210 = R72 463 (difference due to rounding, mathematical
formula or financial calculator gives a more approximate answer).
12. 1 A primary market is for raising new capital whereas a secondary is for trading in
previously issued instruments (See TABLE 10.3: The two main functions of capital
markets – Page 152 in study guide 1).
Option 1 is not true – bonds and equity instruments are initially sold to investors
therefore it refers to the primary market. All other options refer to the secondary
market.
13. 4
10 300 000
(10 300 000+1 150 000)
x 100% = 89,96%
14. 2 Cost of equity = 8,5% + 1,8 (16% - 8,5%) = 22%
15. 3 Cost of equity = D1/Po + g = (2,40 x 1,05)/14,82 + 0,05 = 22%
16. 3 Market value of debentures
i = 11%
I = 2 000 x 12% = R240 (coupon payment)
R = R2 000
