MAC2602: ASSIGNMENT 4 SEMESTER 1 2023
The following is an extract from ALU&STEEL Limited statement of financial position as at
30 June 20x2
Rm
Capital and reserves 0
Equity 600
Ordinary shares of R8 each 600
Debentures 160
Additional information
Expected divided per share R1,80
The current market value per share is R18,40.
The next dividend payable will be R1,40 per share.
Dividends are expected to grow at 5% per year.
Tax rate is 28%
REQUIRED:
Calculate the Cost of equity using the dividend growth model.
(a) 12,61%
(b) 57,61%
(c) 12,99%
(d) 14,78%
Select one:
a.
57,61%
b.
12,99%
c.
12,61%
d.
14,78%
,You want to save money for your daughter’s education at a private school. She will be
going to Grade 1 in five-years’ time. The amount that you will need after five years to
pay for the education is R100 000. You can invest money at 10% compound interest per
annum.
REQUIRED:
Determine how much you should invest every year to have the required amount after
five years. [Set your calculator at four decimal places. Round your final answer to the
nearest rand. Slight rounding differences may occur - choose the alternative that is
closest to your answer.]
(a) R26 380
(b) R17 000
(c) R16 380
(d) R17 039
Select one:
a.
R17 000
b.
R17 039
c.
R16 380
d.
R26 380
The following information regarding JJ’s Ltd. is available:
The current market price per share is R10,20
Rm
Ordinary shares at R10 each R20
Dividend of R1,20 has been declared and paid during the financial year.
REQUIRED:
Calculate the market value of equity of JJ’s Ltd.
(a) R2 040 000
,(b) R2 000 000
(c) R2 080 000
(d) R20 400 000
Select one:
a.
R2 000 000
b.
R20 400 000
c.
R2 080 000
d.
R2 040 000
2. The following information has been given to you. What is the best estimate of
cash flow?
R million
Operational profit 400
Depreciation 140
Finance charges 30
Capital expenditure to sustain operations 180
Tax 90
Repayment of borrowings 100
Equity dividend 60
(a) R80 million
(b) R140 million
(c) R180 million
(d) R240 million
Select one:
, a.
R80 million
b.
R140 million
c.
R240 million
d.
R180 million
1. Rank the three companies in order of market share value by choosing from the
picklist. (First being the highest and third being the lowest)
Picklist: Company 1; Company 2; Company 3
Earnings for the year P/E ratio
R million
Company 1 200 6
Company 2 320 5
Company 3 400 3,5
(a) In order- Company 2, Company 3, and Company 1
(b) In order- Company 3, Company 2, and Company 1
(c) In order- Company 1, Company 3, and Company 2
(d) In order- Company 1, Company 2, and Company 3
The following is an extract from ALU&STEEL Limited statement of financial position as at
30 June 20x2
Rm
Capital and reserves 0
Equity 600
Ordinary shares of R8 each 600
Debentures 160
Additional information
Expected divided per share R1,80
The current market value per share is R18,40.
The next dividend payable will be R1,40 per share.
Dividends are expected to grow at 5% per year.
Tax rate is 28%
REQUIRED:
Calculate the Cost of equity using the dividend growth model.
(a) 12,61%
(b) 57,61%
(c) 12,99%
(d) 14,78%
Select one:
a.
57,61%
b.
12,99%
c.
12,61%
d.
14,78%
,You want to save money for your daughter’s education at a private school. She will be
going to Grade 1 in five-years’ time. The amount that you will need after five years to
pay for the education is R100 000. You can invest money at 10% compound interest per
annum.
REQUIRED:
Determine how much you should invest every year to have the required amount after
five years. [Set your calculator at four decimal places. Round your final answer to the
nearest rand. Slight rounding differences may occur - choose the alternative that is
closest to your answer.]
(a) R26 380
(b) R17 000
(c) R16 380
(d) R17 039
Select one:
a.
R17 000
b.
R17 039
c.
R16 380
d.
R26 380
The following information regarding JJ’s Ltd. is available:
The current market price per share is R10,20
Rm
Ordinary shares at R10 each R20
Dividend of R1,20 has been declared and paid during the financial year.
REQUIRED:
Calculate the market value of equity of JJ’s Ltd.
(a) R2 040 000
,(b) R2 000 000
(c) R2 080 000
(d) R20 400 000
Select one:
a.
R2 000 000
b.
R20 400 000
c.
R2 080 000
d.
R2 040 000
2. The following information has been given to you. What is the best estimate of
cash flow?
R million
Operational profit 400
Depreciation 140
Finance charges 30
Capital expenditure to sustain operations 180
Tax 90
Repayment of borrowings 100
Equity dividend 60
(a) R80 million
(b) R140 million
(c) R180 million
(d) R240 million
Select one:
, a.
R80 million
b.
R140 million
c.
R240 million
d.
R180 million
1. Rank the three companies in order of market share value by choosing from the
picklist. (First being the highest and third being the lowest)
Picklist: Company 1; Company 2; Company 3
Earnings for the year P/E ratio
R million
Company 1 200 6
Company 2 320 5
Company 3 400 3,5
(a) In order- Company 2, Company 3, and Company 1
(b) In order- Company 3, Company 2, and Company 1
(c) In order- Company 1, Company 3, and Company 2
(d) In order- Company 1, Company 2, and Company 3
