FIN3701 LATEST EXAM PACK
written by
accatutor91
, OVERCOMERS TUTORIALS
FIN3701
EXAM PACK
Disclaimer
The information contained in this document is confidential, privileged and only for the
information of the intended recipient and may not be used, published or redistributed
without the prior written consent of Overcomers Tutorials (Pty) Ltd.
The opinions expressed are in good faith and while every care has been taken in preparing
this document, Overcomers makes no representations and gives no warranties of whatever
nature in respect of this document, including but not limited to the accuracy or
completeness of any information, facts and/or opinions contained therein.
Overcomers Tutorials (Pty) Ltd, its subsidiaries, the directors, employees and agents
cannot be held liable for the use of and reliance of the opinions, estimates, forecasts and
findings in this document.
, FIN3701 FINANCIAL MANAGEMENT MAY/JUNE 2017 MEMO
(Q1) 2 cost 1 000 000
Accumulated depreciation (20% x 1 000 000) x 3 (600 000)
400 000
(Q2) 2 proceeds 200 000
Book value (400 000)
Loss (200 000)
Tax benefit (29% x 200 000) 58 000
(Q3) 1 200 000 + 58 000
(Q4) 3 750 000+20 000+5000-258 000-7000
(Q5) 2
(Q6) 2
(Q7) 1
(Q8) 2 NPV = PI (initial investment)-initial investment
(Q9) 2
(Q10) 1
(Q11) 1 discount rate= 6%+0.9(9-6)
=8.7
NPV= 400 000{(1.0875-1)/0.087(1.0875)}-1 500 000
(Q12) 1
(Q13) 1
(Q14) 3 7-2.5
(Q15) 4 {5/90 + ((4/3.2)1/2-1)} x 100
(Q16) 3
(Q17) 1 2.52/(30-(2.5%x30))
(Q18) 1 (7%x 1000) + (1000-985.56)/20
(1000+985.56)/2
Multiply by 100 and then by (1-0.3)
(Q19) 1
(Q20) 1 in units = 10 000/ (25-19) in value = 1000x25
, SECTION B
(Q1)
(1.1) capital structure A = 55% x 10 000
= 5 500 shares
Capital structure B = 35% x 10 000
= 3 500 shares
(1.2) Structure A Structure B
Sales 630 000 630 000
Fixed costs (270 000) (270 000)
Variable costs (220 500) (220 500)
Interest expense (25 025) (18 375)
Profit before tax 114 975 121 625
Tax @ 29% (33 342) (35 271)
Profit for the year 81 633 86 354
EPS 81 633/4500 86
Component Contribution Weight After tax costs WACC
Debt 192 500 55% 9.23 5.08
Equity 157 500 45% 51.83 23.32
Structure B
Component Contribution Weight After tax costs WACC
Debt 122 500 35% 10.65 3.73
Equity 227 500 65% 37.97 24.68
28.41
Calculations
written by
accatutor91
, OVERCOMERS TUTORIALS
FIN3701
EXAM PACK
Disclaimer
The information contained in this document is confidential, privileged and only for the
information of the intended recipient and may not be used, published or redistributed
without the prior written consent of Overcomers Tutorials (Pty) Ltd.
The opinions expressed are in good faith and while every care has been taken in preparing
this document, Overcomers makes no representations and gives no warranties of whatever
nature in respect of this document, including but not limited to the accuracy or
completeness of any information, facts and/or opinions contained therein.
Overcomers Tutorials (Pty) Ltd, its subsidiaries, the directors, employees and agents
cannot be held liable for the use of and reliance of the opinions, estimates, forecasts and
findings in this document.
, FIN3701 FINANCIAL MANAGEMENT MAY/JUNE 2017 MEMO
(Q1) 2 cost 1 000 000
Accumulated depreciation (20% x 1 000 000) x 3 (600 000)
400 000
(Q2) 2 proceeds 200 000
Book value (400 000)
Loss (200 000)
Tax benefit (29% x 200 000) 58 000
(Q3) 1 200 000 + 58 000
(Q4) 3 750 000+20 000+5000-258 000-7000
(Q5) 2
(Q6) 2
(Q7) 1
(Q8) 2 NPV = PI (initial investment)-initial investment
(Q9) 2
(Q10) 1
(Q11) 1 discount rate= 6%+0.9(9-6)
=8.7
NPV= 400 000{(1.0875-1)/0.087(1.0875)}-1 500 000
(Q12) 1
(Q13) 1
(Q14) 3 7-2.5
(Q15) 4 {5/90 + ((4/3.2)1/2-1)} x 100
(Q16) 3
(Q17) 1 2.52/(30-(2.5%x30))
(Q18) 1 (7%x 1000) + (1000-985.56)/20
(1000+985.56)/2
Multiply by 100 and then by (1-0.3)
(Q19) 1
(Q20) 1 in units = 10 000/ (25-19) in value = 1000x25
, SECTION B
(Q1)
(1.1) capital structure A = 55% x 10 000
= 5 500 shares
Capital structure B = 35% x 10 000
= 3 500 shares
(1.2) Structure A Structure B
Sales 630 000 630 000
Fixed costs (270 000) (270 000)
Variable costs (220 500) (220 500)
Interest expense (25 025) (18 375)
Profit before tax 114 975 121 625
Tax @ 29% (33 342) (35 271)
Profit for the year 81 633 86 354
EPS 81 633/4500 86
Component Contribution Weight After tax costs WACC
Debt 192 500 55% 9.23 5.08
Equity 157 500 45% 51.83 23.32
Structure B
Component Contribution Weight After tax costs WACC
Debt 122 500 35% 10.65 3.73
Equity 227 500 65% 37.97 24.68
28.41
Calculations
