FIN3701
Assignment 2 Semester 1 2026
Unique number:
Due Date: 11 April 2026
QUESTION 1
1.1 Calculation of WACC
𝑊𝐴𝐶𝐶 = (𝑊𝑒 × 𝑘𝑒 ) + (𝑊𝑑 × 𝑘𝑑 × (1 − 𝑡))
Where:
𝑊𝑒 = 70%
𝑊𝑑 = 30%
𝑘𝑒 = 15%
𝑘𝑑 = 12%
𝑊𝐴𝐶𝐶 = (0.7 × 15%) + 0.3 × 12% × (1 − 0.28) = 𝟏𝟑. 𝟎𝟗%
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regarding plagiarism, citation, and referencing. These study notes should be used as learning tools and sources of
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the use of these notes. This includes, but is not limited to, poor academic performance, penalties, or any other negative
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, For additional support +27 81 278 3372
QUESTION 1
1.1 Calculation of WACC
= ( × ) + ( × × (1 − ))
Where:
= 70%
= 30%
= 15%
= 12%
= (0.7 × 15%) + 0.3 × 12% × (1 − 0.28) = . %
1.2 Projects to Undertake
Decision rule: Accept projects where IRR > WACC (13.09%)
Project IRR Decision
A 16.5% Accept
B 15.2% Accept
C 12.4% Reject
D 10.1% Reject
Check available retained earnings
Optimal equity portion = 70%
Total funds possible using retained earnings:
= 120 000 ÷ 0.7
= R171 429
Assignment 2 Semester 1 2026
Unique number:
Due Date: 11 April 2026
QUESTION 1
1.1 Calculation of WACC
𝑊𝐴𝐶𝐶 = (𝑊𝑒 × 𝑘𝑒 ) + (𝑊𝑑 × 𝑘𝑑 × (1 − 𝑡))
Where:
𝑊𝑒 = 70%
𝑊𝑑 = 30%
𝑘𝑒 = 15%
𝑘𝑑 = 12%
𝑊𝐴𝐶𝐶 = (0.7 × 15%) + 0.3 × 12% × (1 − 0.28) = 𝟏𝟑. 𝟎𝟗%
DISCLAIMER & TERMS OF USE
Educational Aid: These study notes are intended to be used as educational resources and should not be seen as a
replacement for individual research, critical analysis, or professional consultation. Students are encouraged to perform
their own research and seek advice from their instructors or academic advisors for specific assignment guidelines.
Personal Responsibility: While every effort has been made to ensure the accuracy and reliability of the information in
these study notes, the seller does not guarantee the completeness or correctness of all content. The buyer is
responsible for verifying the accuracy of the information and exercising their own judgment when applying it to their
assignments.
Academic Integrity: It is essential for students to maintain academic integrity and follow their institution's policies
regarding plagiarism, citation, and referencing. These study notes should be used as learning tools and sources of
inspiration. Any direct reproduction of the content without proper citation and acknowledgment may be considered
academic misconduct.
Limited Liability: The seller shall not be liable for any direct or indirect damages, losses, or consequences arising from
the use of these notes. This includes, but is not limited to, poor academic performance, penalties, or any other negative
consequences resulting from the application or misuse of the information provided.
, For additional support +27 81 278 3372
QUESTION 1
1.1 Calculation of WACC
= ( × ) + ( × × (1 − ))
Where:
= 70%
= 30%
= 15%
= 12%
= (0.7 × 15%) + 0.3 × 12% × (1 − 0.28) = . %
1.2 Projects to Undertake
Decision rule: Accept projects where IRR > WACC (13.09%)
Project IRR Decision
A 16.5% Accept
B 15.2% Accept
C 12.4% Reject
D 10.1% Reject
Check available retained earnings
Optimal equity portion = 70%
Total funds possible using retained earnings:
= 120 000 ÷ 0.7
= R171 429
