15748952
MAC2602 – Assessment 3
Question 1:
1.1. (a)
1.2. (a)
1.3. (b)
1.4. (b)
1.5. (c)
1.6. (d)
, Question 2:
(a)
I = 28%
i = 10% x R5 000 000 = R500 000
R = R5 000 000
n=5
= R 2 702 322
(b)
Cost of Capital = (Dividend per Share / Current Price per Share) + Dividend Growth Rate
Dividend per Share = R2 Current Price per Share = R2 Dividend Growth Rate = 6%
Cost of Capital = () + 0.06 Cost of Capital = 1.06 + 0.06 Cost of Capital = 1.12%
Therefore, the cost of capital for Otago Ltd using dividend growth is 1.12%
(c)
R10 x 500 000 = R 5 000 000
(d)
E = Market value of the firm’s equity
D = Market value of the firm’s debt
V=E+D
Re = Coast of equity
Rd = Cost of debt
Tc = Corporate tax rate
MAC2602 – Assessment 3
Question 1:
1.1. (a)
1.2. (a)
1.3. (b)
1.4. (b)
1.5. (c)
1.6. (d)
, Question 2:
(a)
I = 28%
i = 10% x R5 000 000 = R500 000
R = R5 000 000
n=5
= R 2 702 322
(b)
Cost of Capital = (Dividend per Share / Current Price per Share) + Dividend Growth Rate
Dividend per Share = R2 Current Price per Share = R2 Dividend Growth Rate = 6%
Cost of Capital = () + 0.06 Cost of Capital = 1.06 + 0.06 Cost of Capital = 1.12%
Therefore, the cost of capital for Otago Ltd using dividend growth is 1.12%
(c)
R10 x 500 000 = R 5 000 000
(d)
E = Market value of the firm’s equity
D = Market value of the firm’s debt
V=E+D
Re = Coast of equity
Rd = Cost of debt
Tc = Corporate tax rate
