FIN2601 Assignment 1 (COMPLETE CALCULATIONS) Semester 1 2025 (185354) - DUE 17 April 2025

FIN2601 Assignment 1 (100% COMPLETE ANSWERS) Semester 1 2025 (Unique Number: 185354) - DUE 17 April 2025 ;100 % TRUSTED workings, Expert Solved, Explanations and Solutions. For assistance call or W.h.a.t.s.a.p.p us on ...(.+.2.5.4.7.7.9.5.4.0.1.3.2)........... QUESTION 1 [18 MARKS] Read the information provided and then answer the questions that follow. Indicate all the steps in your calculations – it is NOT enough to provide only a final answer. Jungle Build Projects is a relatively young civil engineering company based in Rustenburg, North West. A month ago, Sherman Alexander Hemsley was appointed as the financial manager of the company. He received the company's yearly financial statistics and was requested to prepare a report on the success of the business. The report must be submitted to management. Extract from the statement of comprehensive income for 31 December Sales R4 000 000 R6 000 000 FIN2601/101/1/2025 5 Cost of goods sold R2 800 000 R4 600 000 Gross profit R1 200 000 R1 400 000 Administrative expenses R520 000 R600 000 Earnings before interest and tax (EBIT) R680 000 R800 000 Extract from the statement of financial position as of 31 December Trade and other receivables R440 000 R820 000 Inventories R460 500 R380 000 Cash and cash equivalents R299 500 R300 000 Current assets R1 200 000 R1 500 000 Total assets R5 500 000 R7 000 000 Total liabilities R2 900 000 R5 000 000 Take the following into consideration: a) The below table of ratios provided is applicable for the year 2023 and 2024 b) Assume a 365-day year for the calculations. c) Apply year end-based figures for inventory. Use the information above to answer the following questions: 1.1 Use the financial statement above to calculate the following ratios for 2023 and 2024: (16 marks) Ratio Gross profit margin Solvency Average collection period Total asset turnover Debt ratio You are given the following information: 1) The Treasury Bill rate is 5%. 2) The required return on the market is 8%. 3) The expected growth rate for the company is 4%. 4) The last dividend paid was R0,80. 5) The beta value is 1,3. Now, assume the following changes occur: a) The inflation premium drops by 1%. b) An increased degree of risk aversion causes the required return on the market to go to 10% after adjustment for the changed inflation premium. c) The expected growth rate increases to 6%. d) The beta value rises to 1,5. What would the change Based on your findings, highlight the main differences between the years 2023 and 2024 under the following headings provided. Provide possible reasons by explaining any one of them: Da Gama (Pty) Ltd has a current dividend of R3. Analysts expect that the dividend will grow at a rate of 25% per annum for the next three years. It will then grow at a constant 10% per annum. The company’s cost of equity capital is estimated to be 15%. What is the current share price of Da Gama? Profitability ratios Debt ratios Activity ratios Ensure that your analysis includes a detailed comparison of the ratios for both years and provides a clear explanation for the observed differences. Alpha Pharmaceuticals Economic Probability Return Page 66 of 116 condition Recession 0.35 12 Mid recession 0.25 20 Boom 0.40 28 Beta Engineering Economic condition Probability Return Recession 0.35 6 Mid recession 0.25 16 Boom 0.40 24 QUESTION 15 The expected return for Alpha Pharmaceuticals and Beta Engineering is … QUESTION 2 [12 MARKS] Read the information provided and then answer the questions that follow. Indicate all the steps in your calculations – it is NOT enough to provide only a final answer. Technological & Innovations Ltd. had been founded ten years ago and was profitable for the last five years. However, it did not pay a dividend as it needed all its earnings to support growth. Management plans to pay a R1,69 dividend three years from now, with subsequent growth rates as follows: 30% (Year 4), 40% (Year 5) and a constant rate of 15% thereafter. Given the dividend stream below and a required return of 18%: Year 0 1 2 3 4 5 6 FIN2601/101/1/2025 7 Growth rate rsk2601 30% 40% 15% Dividends R0 R0 R0 R1,69 R_____ R_____ R_____ Use the information above to answer the following questions: 2.1 Determine the value of the cash dividends at the end of each year. (2 marks) 2.2 Determine the present value of dividends expected during the initial growth period. (2 marks) 2.3 Determine the value of the share at the end of the initial growth period. (7 marks) ban2601 2.4 Determine the present value of the share after the initial period. (1 mark)