FIN3701 Assignment 2 (COMPLETE ANSWERS) Semester 1 2026 - DUE 17 April 2026; 100% Correct solutions and explanations.

FIN3701 Assignment 2 (COMPLETE ANSWERS) Semester 1 2026 - DUE 17 April 2026; 100% Correct solutions and explanations. Assignment number Semester 1 02 Due date: 17 April 2026 Unique number: 224278 Assignment 02 – Semester 1 Due date: 17 April 2026 Unique number: 224278 The purpose of this assignment is to evaluate your knowledge and understanding of fundamental issues related to a company’s long-term financing decisions. To complete this assignment, you need to study chapters 13, 14 and 17 of the prescribed book, along with the relevant learning units. Answer the following questions and submit your assignment at . QUESTION 1 [15 marks] Oreatli Company’s optimal capital structure consists of 30% debt and 70% equity. The interest rate on its debt is a constant 12%, while the cost of ordinary share funding from retained earnings is 15%. The company’s marginal tax rate is 28%. Oreatli has identified the following investment opportunities: • Project A: cost = R70 000; IRR = 16,5% • Project B: cost = R70 000; IRR = 15,2% • Project C: cost = R40 000; IRR = 12,4% • Project D: cost = R60 000; IRR = 10,1% Oreatli has R120 000 in available earnings. REQUIRED: 1.1 Calculate Oreatli Company’s weighted average cost of capital (WACC). (3) 1.2 Based on its WACC and the amount of retained earnings available, which projects should