MAC2602 Assignment 2 (COMPLETE ANSWERS) Semester 1 2024 (703803) - DUE 2 April 2024

MAC2602 Assignment 2 (COMPLETE ANSWERS) Semester 1 2024 (703803) - DUE 2 April 2024 ;100% TRUSTED workings, explanations and solutions. for assistance Whats-App.......0.6.7..1.7.1..1.7.3.9............ Question 1 Correct Mark 2.00 out of 2.00 QUIZ Which ONE of the following is NOT a strategic aim of corporate governance? (a) To reduce costs within the organisation to boost short-term profi tability. (b) To improve investor confi dence in the organisation. (c) To increase the organisation’s transparency to stakeholders. (d) To ensure that the organisation abides with relevant laws and acts ethically. Select one: a. To ensure that the organisation abides with relevant laws and acts ethically. b. To improve investor confi dence in the organisation. c. To reduce costs within the organisation to boost short-term profi tability.  d. To increase the organisation’s transparency to stakeholders. 49.00/50.00 98.00 Question 2 Correct Mark 2.00 out of 2.00 Question 3 Correct Mark 2.00 out of 2.00 Which ONE of the following techniques is NOT a technique to be used in performing fi nancial analysis on historical fi nancialinformation? (a) Failure prediction (b) Trend analysis (c) Ratio analysis (d) SWOT analysis Select one: a. Ratio analysis b. Trend analysis c. SWOT analysis  d. Failure prediction Select the concept that can be explained as being ‘a set of processes, customs, policies, laws, and institutions affecting the waythat a business is managed and that includes the relationships among the many stakeholders involved with an organisation andthe goal of the business . (a) Memorandum of incorporation (MOI) (b) Corporate governance (c) Sustainability for businesses (d) Strategic fi nancial management Select one: a. Sustainability for businesses b. Corporate governance  c. Memorandum of incorporation (MOI) d. Strategic fi nancial management Question 4 Correct Mark 2.00 out of 2.00 Which ONE of the following statements will be correct to use to explain the concept of discounting to a fellow student? (a) It is the process used to determine the original investment by discounting the future value, which resulted from thecompounding of interest, back to the present value of the investment. With this process the present value of an investment isdetermined. (b) It is the process of calculating the interest on a principal or initial amount and adding that interest to the principal forinvestment in the following period. (c) It is the amount that an investment will be worth at a future date if invested at a particular simple or compound interestrate. (d) It is the current value of future cash fl ows, determined by application of a discount rate. Select one: a. It is the current value of future cash fl ows, determined by application of a discount rate. b. It is the process used to determine the original investment by discounting the future value, which resulted fromthe compounding of interest, back to the present value of the investment. With this process the present value ofan investment is determined.  c. It is the process of calculating the interest on a principal or initial amount and adding that interest to the principal forinvestment in the following period. d. It is the amount that an investment will be worth at a future date if invested at a particular simple or compoundinterest rate. Question 5 Incorrect Mark 0.00 out of 2.00 Use the following list of scenarios and select all possible threats that will jeopardise the profi tability and success of anorganisation? (1) A delay of delivery of imported material due to ineffective systems at major ports in the country. (2) The Reserve Bank’s decision to lower interest rates after the infl ation rate decreased. (3) The unemployability rate increases and the market demand for luxury goods dries up. (4) The inability of ESKOM to supply uninterrupted power leading to increased demand for Solar energy systems fromorganisations in that industry. (a) Scenarios (1), (2) and (3) (b) Scenarios (1) and (3) (c) Scenarios (1), (3) and (4) (d) Scenarios (1) and (2) Select one: a. Scenarios (1) and (2) b. Scenarios (1), (2) and (3) c. Scenarios (1), (3) and (4)  d. Scenarios (1) and (3) Question 6 Correct Mark 2.00 out of 2.00 Select all the statements that are TRUE? (1) Short-term fi nancing refers to externally generated funds that are used by organisations to fi nance their cyclical/seasonalneeds or funding that are utilised when an organisation experiences a cash shortfall. (2) Long-term loans (private debt) are normally negotiated directly between the borrowing organisation and the lendingorganisation. (3) Credit rating agencies such as Standard & Poor and Fitch are organisations that provide international fi nancial researchon bonds and other debt instruments that are issued by governments and other organisations. (4) A debenture or bond is a short-term contract between the organisation that issues it and the buyer thereof. (a) Statements (1), (2) and (3) (b) Statements (1) and (2) (c) Statements (1), (3) and (4) (d) Statements (1), (2), (3) and (4) Select one: a. Statements (1), (3) and (4) b. Statements (1), (2) and (3)  c. Statements (1), (2), (3) and (4) d. Statements (1) and (2) Question 7 Correct Mark 2.00 out of 2.00 Question 8 Incorrect Mark 0.00 out of 2.00 Select all the statements regarding capital structure theory and capital structure that are TRUE? (1) At any given point in time the optimal capital structure and the actual capital structure may differ. (2) Capital structure refers to how an organisation fi nance its current assets, expressed in percentages, the proportion ofdebt versus equity. (3) Capital is raised within the capital markets and consists of long-term fi nancing in the form of equity and debt. (4) Because of the varying risks and expectations of investors the sources carry different cost(s) to organisations. (a) Statements (1), (2) and (3) (b) Statements (1), (2), (3) and (4) (c) Statements (1), (3) and (4) (d) Statements (1), (2) and (4) Select one: a. Statements (1), (2) and (4) b. Statements (1), (2), (3) and (4) c. Statements (1), (3) and (4)  d. Statements (1), (2) and (3) Which of the following mission statements is MOST likely to defi ne the core purpose of the TIME NEWS paper? (a) We aim to be the best in classifi ed advertisements. (b) We aim to bring you the best newspaper in the country. (c) We want to put the news in your hand wherever you are. (d) We aim to provide a low-cost newspaper experience in the country. Select one: a. We aim to bring you the best newspaper in the country. b. We aim to be the best in classifi ed advertisements.  c. We aim to provide a low-cost newspaper experience in the country. d. We want to put the news in your hand wherever you are. Question 9 Incorrect Mark 0.00 out of 2.00 Which of the following statements regarding strategy are correct? (1) Strategy involves only the board. (2) Strategy involves only senior managers. (3) Strategy involves managers at all levels. (4) Strategy involves only senior and middle managers. (5) Strategy involves only the senior managers and the board of directors. (a) Statement (1) (b) Statement (3) (c) Statements (3), (4) and (5) (d) Statements (1), (4) and (5) Select one: a. Statements (1), (4) and (5)  b. Statements (3), (4) and (5) c. Statement (3) d. Statement (1) Question 10 Correct Mark 2.00 out of 2.00 Question 11 Correct Mark 3.00 out of 3.00 Select all the statements that are TRUE regarding the capital asset pricing model? (1) This model assumes growth in earnings as well as a corresponding increase in dividends. (2) This model is based on the principle that investors in ordinary shares should be rewarded for the risk that they bear. (3) This model determines the required rate of return for the equity investor, the latter comprising of a market risk elementand a risk-free rate. (4) This model expects that dividends will grow at a constant rate in the future. (a) Statements (1), (2) and (3) (b) Statements (2) and (3) (c) Statements (1), (3) and (4) (d) Statements (1), (2), (3) and (4) Select one: a. Statements (2) and (3)  b. Statements (1), (2) and (3) c. Statements (1), (3) and (4) d. Statements (1), (2), (3) and (4) Mr Daniels is a bondholder and owns a R5 000 convertible bond. The bond has a conversion rate of 400 and can beconverted into ordinary shares. Mr. Daniels has the choice to receive R5 000 on the maturity date or to convert his bond to400 ordinary shares. What is the lowest price that will benefi t Mr Daniels to convert his bond to ordinary shares? (a) R13,50 (b) R11,00 (c) R 12,70 (d) R10,90 Select one: a. R13,50 b. R10,90 c. R12,70  d. R11,00 Question 12 Correct Mark 3.00 out of 3.00 Question 13 Correct Mark 3.00 out of 3.00 Orlando Ltd is fi nanced as follows: 20 million ordinary shares of R2 each R 5 000 debentures of R1 000 each R Retained income R Long-term loans R Calculate the debt:equity ratio of Orlando Ltd? Set your calculator to four decimals and round your fi nal answer to twodecimal places. (a) 68,32: 31,68 (b) 74,53: 25,40 (c) 31,68: 68,32 (d) 25,47: 74,53 Select one: a. 74,53: 25,40 b. 31,68: 68,32  c. 68,32: 31,68 d. 25,47: 74,53 A company has the following funding given at market values: R300 000 long-term loan, and R600 000 ordinary shares. Thecurrent cost of equity was established to be 14% and the cost of the long-term loan after taxation at 28% is 18%. Calculate theWACC using the formula method? (a) 16,67% (b) 12,38% (c) 15,33% (d) 18,00% Select one: a. 16,67% b. 18,00% c. 12,38% d. 15,33%  Question 14 Correct Mark 3.00 out of 3.00 Use the following information as on 31 March 2023 for MAC-D Ltd. Share capital = R 64 000 Retained earnings = R 55 000 Net Profi t = R 32 000 EBIT = R 50 000 Interest expense = R 2 000 Total Equity = R119 000 Total assets = R152 000 Total liabilities (debt) = R 33 000 Calculate the Interest Cover ratio for MAC-D Ltd . Set your calculator to four decimal places and round your fi nal answer to twodecimal places. If s light rounding differences occur - choose the alternative that is closest to your answer. (a) 75,00 times (b) 50: 2 (c) 25,00% (d) 25,00 times Select one: a. 25,00% b. 50: 2 c. 75,00 times d. 25,00 times  Question 15 Correct Mark 3.00 out of 3.00 You are given the following information regarding Green Packaging Solutions (Pty) Ltd’s funding structure: 7 500 bonds issued with a nominal value of R1 500 each and time to maturity of 15 years. It pays an annual coupon rate of11% per annum and the current market return on similar bonds with a maturity date of 15 years is 12% per annum (pre-tax).500 000 ordinary shares are in issue with a nominal value of R45 per share. The next dividend payable will be R9 per share. Itis expected that dividends will have a long-term sustainable growth rate of 5%. The shares have a current market value of R80per share. The corporate tax rate is 28% Determine the cost of equity of Green Packaging Solutions (Pty) Ltd? Set your calculator to four decimal places and round thefi nal answer to two decimal places. If slight rounding differences occur - choose the alternative that is closest to your answer. (a) 11,00% (b) 11,42% (c) 16,25% (d) 17,00% Select one: a. 16,25%  b. 17,00% c. 11,00% d. 11,42% Question 16 Correct Mark 3.00 out of 3.00 You are given the following information for Elancyl (Pty) Ltd. Book value of long-term loan R Market value of debentures R Market value of ordinary shares R Market interest rate of debentures (pre-tax) 11% Market rate for similar long-term loans (pre-tax) 9% Shareholders required rate of return 13% Determine the after-tax cost for the debentures and the long-term loan of Elancyl (Pty) Ltd respectively? Set your calculator tofour decimal places and round the fi nal answer to two decimal places. Slight rounding differences may occur - choose thealternative that is closest to your answer. (a) Debentures 11,00% and long-term loan 6,48% (b) Debentures 7,92% and long-term loan 9,00% (c) Debentures 11,00% and long-term loan 9,00% (d) Debentures 7,92% and long-term loan 6,48% Select one: a. Debentures 11,00% and long-term loan 9,00% b. Debentures 7,92% and long-term loan 9,00% c. Debentures 11,00% and long-term loan 6,48% d. Debentures 7,92% and long-term loan 6,48%  Question 17 Correct Mark 3.00 out of 3.00 Use the following information. Revenue for the current period = R980 million - (previous period was R780 million). Operating cost for the current period = R23 000 million – (previous period was R55 million). Calculate the growth rate for revenue and for operating cost respectively : (a) Revenue -25,64% (decline); Operating cost 58,18% (growth or increase) (b) Revenue 25,64% (growth or increase); Operating cost -58,18% (decline) (c) Revenue 20,41% growth or increase); Operating cost -139,13 (decline) (d) Revenue -20,41% (decline); Operating cost 139,13% (growth or increase) Select one: a. Revenue -25,64% (decline); Operating cost 58,18% (growth or increase) b. Revenue 20,41% growth or increase); Operating cost -139,13 (decline) c. Revenue -20,41% (decline); Operating cost 139,13% (growth or increase) d. Revenue 25,64% (growth or increase); Operating cost -58,18% (decline)  Question 18 Correct Mark 3.00 out of 3.00 The following information about BLUE-DOT (Pty) Ltd is available: Extract from the statement of fi nancial position: Debentures at 13% per annum R Non-distributable reserves Long-term loan Retained income Ordinary share capital R R R R Additional information: - The debentures have a face value of R and are redeemable after eight years at face value. - The current dividend paid to shareholders was R4,60 and the expected growth rate is 7% per annum. - The ordinary shares have a nominal value of R20 per share. The current market value per share is R45. - The current market return for similar debentures with a life of eight years is 12% before-tax. - The agreement of the long-term loan provides that interest is charged at 9% per annum. The current JIBAR rate for similarloans is 11% (after-tax at the tax rate for BLUE-DOT (Pty) Ltd ). - The current tax rate for companies is 28%. Calculate the market value of BLUE-DOT (Pty) Ltd’s equity? (a) R (b) R (c) R (d) R Select one: a. R b. R c. R d. R  Question 19 Correct Mark 3.00 out of 3.00 Question 20 Correct Mark 3.00 out of 3.00 CAPITAL SAVE is a fi nance company that has granted a R400 000 loan to Mr Peterson. The loan is repayable in equalinstalments over 20 years, including capital and interest. CAPITAL SAVE wants to earn interest at 18% per annum on itsfi nance agreement. Determine the annual instalment that will be required, by using the appropriate equation and factor table? Set your calculator tofour decimal places and round your fi nal answer to the nearest rand. Slight rounding differences may occur due to the use offactor tables - choose the alternative that is closest to your answer . (a) R 2 142 (b) R14 800 (c) R74 676 (d) R74 724 Select one: a. R74 676 b. R74 724  c. R14 800 d. R 2 142 VIP electrical has a debt: equity ratio of 45: 55 and has a total capital of R600 million. The current cost of debt (after tax) is8% and that of equity is 15%. Calculate the weighted average cost of capital (WACC) of VIP electrical. Set your calculator tofour decimals and round your fi nal answer to two decimal places. Slight rounding differences may occur - choose thealternative that is closest to your answer. (a) 10,05% (b) 10,65% (c) 11,15% (d) 11,85% Select one: a. 10,05% b. 11,85%  c. 11,15% d. 10,65% UNISA  2024  MAC2602-24-S1  Welcome Message  Assessment 2 Started on Friday, 29 March 2024, 9:33 AM State Finished Completed on Friday, 29 March 2024, 10:20 AM Time taken 47 mins 39 secs Marks Grade out of 100.00 Question 1 Correct Mark 2.00 out of 2.00 QUIZ Which combination of the following statements are NOT included as forces in the competitive environment that infl uenceindustry competition? (1) The bargaining power of buyers (2) The bargaining power of shareholders (3) The threat of new entrants (4) Rivalry among new competitors (5) The threat of substitute products or services (a) Statements (1) and (3) (b) Statements (1) and (4) (c) Statements (2) and (4) (d) Statements (2), (3) and (4) Select one: a. Statements (1) and (4) b. Statements (1) and (3) c. Statements (2), (3) and (4) d. Statements (2) and (4)  46.00/50.00 92.00 Question 2 Correct Mark 2.00 out of 2.00 Question 3 Correct Mark 2.00 out of 2.00 Which combination of statements below are examples of connected stakeholders that are connected to an organisation solelythrough the relationship they have with the organisation? (1) The customers of a business. (2) The suppliers of a business. (3) The managers of a business. (4) The executive directors of a business. (a) Statements (3) and (4) (b) Statements (1) and (2) (c) Statements (2) and (3) (d) Statements (1) and (3) Select one: a. Statements (2) and (3) b. Statements (1) and (3) c. Statements (3) and (4) d. Statements (1) and (2)  Apply your knowledge about pricing strategies and s elect the explanation that best describes selective pricing. (a) The setting of a low selling price for a product or service to gain market share. (b) The setting of high selling prices for unique products, thereby maximising short-term profi ts. (c) The setting of the selling price for a product or service on the perceived value to the customer. (d) The setting of different selling prices for the same product or service in different markets. Select one: a. The setting of the selling price for a product or service on the perceived value to the customer. b. The setting of a low selling price for a product or service to gain market share. c. The setting of high selling prices for unique products, thereby maximising short-term profi ts. d. The setting of different selling prices for the same product or service in different markets.  Question 4 Correct Mark 2.00 out of 2.00 From the scenarios below, select examples of actions relating to secondary stakeholders infl uencing the strategy of anorganisation? (1) Black Economic Empowerment legislation. (2) An increase of tax on alcoholic beverages. (3) Banning of smoking in public areas. (4) National Union of Mineworkers demanding an increase in salaries for mineworkers. (5) Customers that boycott Dischem Pharmacies due to their employment policy that restricts employing or promotion of acertain race. (a) Scenarios (1) and (2) (b) Scenarios (1), (2), and (3) (c) Scenarios (1), (2), (3), and (4) (d) Scenarios (1), (2), (3), (4) and (5) Select one: a. Scenarios (1), (2), (3), and (4)  b. Scenarios (1), (2), (3), (4) and (5) c. Scenarios (1) and (2) d. Scenarios (1), (2), and (3) Question 5 Correct Mark 2.00 out of 2.00 Select the option that will NOT be regarded as a correct strategic objective of a company that operates a supermarket chain inSouth Africa. Their mission is: To be one of the largest in the local industry to meet the needs of all our stakeholders. (a) To become one of the top three supermarket chains in Africa by gaining at least 80% of the market share within the nexttwo years. This increase in market share from the current 40% to 80% will be achieved by taking over 20 existingsupermarkets of competitors . (b) To become one of the top fi ve supermarket chains in South Africa by gaining at least 60% of the market share within thenext four years. This increase in market share from the current 40% to 60% will be achieved by aggressive marketing andcutting costs by implementing a bulk buying policy. (c) To become one of the top fi ve supermarket chains in South Africa by gaining at least 50% of the market share within thenext fi ve years. This increase in market share from the current 40% to 50% will be achieved by taking over 30 identifi edcompetitors in South African rural areas. Additionally aggressive marketing and cutting costs by implementing a bulk buyingpolicy will be used to help reach the targeted market share . (d) To become one of the top fi ve supermarket chains in South Africa by gaining at least 50% of the market share within thenext fi ve years. This increase in market share from the current 40% to 50% will be achieved by taking over 10 identifi edcompetitors in South African townships. The marketing budget will be increased to enable aggressive marketing. Theimplementation of a bulk buying policy will be used to help cut costs and reach the targeted market share . Select one: a. To become one of the top fi ve supermarket chains in South Africa by gaining at least 60% of the market share withinthe next four years. This increase in market share from the current 40% to 60% will be achieved by aggressivemarketing and cutting costs by implementing a bulk buying policy. b. To become one of the top fi ve supermarket chains in South Africa by gaining at least 50% of the market share withinthe next fi ve years. This increase in market share from the current 40% to 50% will be achieved by taking over 10identifi ed competitors in South African townships. The marketing budget will be increased to enable aggressivemarketing. The implementation of a bulk buying policy will be used to help cut costs and reach the targeted marketshare. c. To become one of the top fi ve supermarket chains in South Africa by gaining at least 50% of the market share withinthe next fi ve years. This increase in market share from the current 40% to 50% will be achieved by taking over 30identifi ed competitors in South African rural areas. Additionally aggressive marketing and cutting costs byimplementing a bulk buying policy will be used to help reach the targeted market share. d. To become one of the top three supermarket chains in Africa by gaining at least 80% of the market share withinthe next two years. This increase in market share from the current 40% to 80% will be achieved by taking over 20existing supermarkets of competitors.  Question 6 Incorrect Mark 0.00 out of 2.00 Which ONE of the following options will NOT be a main objective when you are conducting fi nancial analysis? (a) To use as evaluation of the organisation’s prospects for the future in order to help external fund providers with investmentdecisions as well. (b) To be of assistance in the management of long-term funds only. (c) To be used for internal decision-making by the management of the organisation regarding cash management, investmentof funds etcetera. (d) To be used to evaluate the performance of the management of the organisation as refl ected in the analysis of theirhistorical fi nancial information in the organisation’s annual fi nancial statements. Select one: a. To be used for internal decision-making by the management of the organisation regarding cash management,investment of funds etcetera. b. To be used to evaluate the performance of the management of the organisation as refl ected in the analysis of theirhistorical fi nancial information in the organisation’s annual fi nancial statements. c. To be of assistance in the management of long-term funds only. d. To use as evaluation of the organisation’s prospects for the future in order to help external fund providers withinvestment decisions as well.  Question 7 Incorrect Mark 0.00 out of 2.00 Select all the statements that are TRUE? (1) Globalisation has led to greater competition for services and products as well as international competition (2) The traditional overall objective of businesses was the long-term owner/investor value maximisation. (3) Corporate governance has resulted in the inclusion of sustainability information in annual reports. (4) The most appropriate way to report performance is the use of a mixture of fi nancial- and non-fi nancial measures. (a) Statements (1), (2) and (3) (b) Statements (1) and (2) (c) Statements (1), (3) and (4) (d) Statements (1), (2), (3) and (4) Select one: a. Statements (1), (3) and (4) b. Statements (1), (2), (3) and (4)  c. Statements (1), (2) and (3) d. Statements (1) and (2) Question 8 Correct Mark 2.00 out of 2.00 Select the correct explanation for capital structure, from the options below . (a) It is the money the organisation has on hand (including petty cash, unbanked payments received) as well as the money inthe bank (including cheque accounts or short-term deposits ) . (b) It describes the annual return or compensation earned on an investment. (c) It refers to the controlling of balances included in the current assets and current liabilities, the way the related functionswithin the organisation are performed and the way working capital is fi nanced . (d) It is the manner in which an organisation’s non-current assets are fi nanced and is normally expressed in percentages ofeach type of capital used by the organisation . Select one: a. It describes the annual return or compensation earned on an investment. b. It refers to the controlling of balances included in the current assets and current liabilities, the way the relatedfunctions within the organisation are performed and the way working capital is fi nanced. c. It is the money the organisation has on hand (including petty cash, unbanked payments received) as well as themoney in the bank (including cheque accounts or short-term deposits). d. It is the manner in which an organisation’s non-current assets are fi nanced and is normally expressed inpercentages of each type of capital used by the organisation.  Question 9 Incorrect Mark 0.00 out of 2.00 Which ONE of the following formulas is NOT used to calculate the Weighted Average Cost of Capital (WACC)? Select one: a.  b. c. d. Question 10 Correct Mark 2.00 out of 2.00 Question 11 Correct Mark 3.00 out of 3.00 Select the combination of the following statements regarding the effective interest rate that are all TRUE . (1) It is the annual rate, which gets the same result as the compound interest rate, at a given periodic rate, for a given numberof compounding periods per year. (2) It is the rate charged by the lender or paid by the borrower each period. (3) It will give the same result as the interest per period compounded a number of times per year if it is compounded once ayear. (4) It is useful when comparing investment alternatives with different compounding periods. a) S tatements (1) and (3) b) Statements (1), (2) and (4) c) Statements (1), (3), and (4) d) Statements (2) and (4) Select one: a. Statements (1), (3), and (4)  b. Statements (1), (2) and (4) c. Statements (2) and (4) d. Statements (1) and (3) Washer Masher Limited has a beta of 1,5. The market rate of return is 8%, and the risk-free rate is 4%. Calculate the currentcost of equity of Washer Masher by using the capital asset pricing model? (a) 8% (b) 4% (c) 6% (d) 10% Select one: a. 4% b. 8% c. 6% d. 10%  Question 12 Correct Mark 3.00 out of 3.00 Use the following information as on 31 March 2022 for Perfect-Pizzas Ltd. Total equity = R Ordinary share capital = R (Note 1) Non-current liabilities = R 12% Debentures = R (Note 2) Long-term loan = R (Note 3) Current liabilities = R Total equity and liabilities = R Notes & Additional information 1. The historical average issue price of ordinary shares is 375 cents. The latest known share price is 938 cents. Perfect-Pizza’s Ltd has just declared and paid a dividend of 34 cents. In line with its stable annual growth, the company is expectingto declare a dividend of 40 cents for the year ended 31 March 2023. The government bonds (risk-free rate) currently yield 8,21%, and the company’s beta is estimated at 1,3 while the market riskpremium is 8,5%. 2. Similar debentures are trading at 10% per annum. The interest is payable annually in arrears and the redemption date ofthese debentures is after fi ve years. 3. The long-term loan is repayable in three years’ time and carries an interest rate of prime rate + 2%. The current prime rate is10,5% The current effective tax rate is 28%. All percentages given are before tax, unless where otherwise stated . Calculate the growth rate “g” that you will use in the Gordon’s growth model for Perfect-Pizzas Ltd? Set your calculator to fourdecimal places for calculations and round your fi nal answer to two decimal places. If s light rounding differences occur -choose the alternative that is closest to your answer. (a) 12,00% (b) 7,00% (c) 10,50% (d) 17,65% Select one: a. 10,50% b. 7,00% c. 17,65%  d. 12,00% Question 13 Correct Mark 3.00 out of 3.00 You are given the following information regarding Green Packaging Solutions (Pty) Ltd’s funding structure: 7 500 bonds issued with a nominal value of R1 500 each and time to maturity of 15 years. It pays an annual coupon rate of11% per annum and the current market return on similar bonds with a maturity date of 15 years is 12% per annum (pre-tax). 500 000 ordinary shares are in issue with a nominal value of R45 per share. The next dividend payable will be R9 per share.It is expected that dividends will have a long-term sustainable growth rate of 5%. The shares have a current market value ofR80 per share. The corporate tax rate is 28% Determine the after-tax cost of debt (bonds) of Green Packaging Solutions (Pty) Ltd? Set your calculator to four decimal placesand round the fi nal answer to two decimal places. If slight rounding differences occur - choose the alternative that is closestto your answer. (a) 8,64% (b) 3,36% (c) 11,72% (d) 12,00% Select one: a. 12,00% b. 8,64%  c. 3,36% d. 11,72% Question 14 Correct Mark 3.00 out of 3.00 The following information (year-on-year datasets) for ABC company is available: Accounts 2022 2023 Total assets Salaries & expenses 800 000 805 000 Operating profi t 400 000 600 000 Calculate the Return on total assets for ABC company for both years? (a) 2022 = 20%; 2023 = 24% (b) 2022 = 24%; 2023 = 20% (c) 2022 = 40%; 2023 = 32% (d) 2022 = 32%; 2023 = 40% Select one: a. 2022 = 40%; 2023 = 32% b. 2022 = 24%; 2023 = 20% c. 2022 = 32%; 2023 = 40% d. 2022 = 20%; 2023 = 24%  Question 15 Correct Mark 3.00 out of 3.00 FOX Ltd is fi nanced with 300 million ordinary shares with an issue price of R10 (market share price is R20) each and with 2million, 15% debentures at a current market value of R. Current tax rate is 28%. Calculate the weighted averagecost of capital (WACC) of FOX Ltd if k = 18% and k = 15% (before tax). Use the mathematical formula method. Set yourcalculator to four decimal places for calculations and round your fi nal WACC percentage to two decimals. (a) 17,56% (b) 17,77% (c) 15,18% (d) 17,99% Select one: a. 15,18% b. 17,99% c. 17,56% d. 17,77%  e d Question 16 Correct Mark 3.00 out of 3.00 Use the following information as on 28 February 2023 for EXMART Ltd. Total Current assets = R Total Current liabilities = R Total assets = R Inventory = R Revenue = R Cost of sales = R EBIT = R Interest expense = R Net profi t = R 754 000 Number of shares issued = 1000 000 Dividend per share = 20 cents Sales on credit = 60% of revenue Calculate the Liquid asset ratio for EXMART Ltd as at 28 February 2023? Set your calculator to four decimal places forcalculations and round your fi nal answer to two decimal places. If s light rounding differences occur - choose the alternativethat is closest to your answer. (a) 144,6% (b) 1: 0,69 (c) 1,45: 1 (d) 2,16 times Select one: a. 1: 0,69 b. 144,6% c. 2,16 times d. 1,45: 1  Question 17 Correct Mark 3.00 out of 3.00 You are given the following information of Legal-gun-traders (Pty) Ltd. The current market price per share on 1 June 2022 is R14,82. A dividend of R2,40 has been declared and paid during theprevious fi nancial year, ending 31 May 2022. It is expected that dividends will grow at a constant rate of 5% per year for theforeseeable future. The market rate of return is 16%, the risk-free rate is 8,5% and the beta is 1,8. The company holds R2 000(face value) debentures which are redeemable after six years at face value. The annual interest payment on the debentures(coupon rate) is 12%. The current market return for similar debentures with a life of six years is 11%. Assume the currentcompany tax rate is 28%. Determine the current cost of equity (%) for Legal-gun-traders (Pty) Ltd? You must use the capitalasset pricing model (CAPM). Set your calculator at four decimal places and round your fi nal answer to two decimal places. (a) 20,00% (b) 22,00% (c) 29,50% (d) 37,30% Select one: a. 29,50% b. 20,00% c. 37,30% d. 22,00%  Question 18 Incorrect Mark 0.00 out of 3.00 You are given the following information for Elancyl (Pty) Ltd. Book value of long-term loan R Market value of debentures R Market value of ordinary shares R Market interest rate of debentures (pre-tax) 11% Market rate for similar long-term loans (pre-tax) 9% Shareholders required rate of return 13% Determine the weighted average cost of capital (WACC) of Elancyl (Pty) Ltd? Set your calculator to four decimal places andround the fi nal answer to two decimal places. If slight rounding differences occur - choose the alternative that is closest toyour answer. (a) 12,26% (b) 13,00% (c) 11,32% (d) 11,84% Select one: a. 11,32% b. 12,26% c. 11,84%  d. 13,00% Question 19 Correct Mark 3.00 out of 3.00 The following information about BLUE-DOT (Pty) Ltd is available: Extract from the statement of fi nancial position: Debentures at 13% per annum R Non-distributable reserves Long-term loan Retained income Ordinary share capital R R R R Additional information: - The debentures have a face value of R and are redeemable after eight years at face value. - The current dividend paid to shareholders was R4,60 and the expected growth rate is 7% per annum. - The ordinary shares have a nominal value of R20 per share. The current market value per share is R45. - The current market return for similar debentures with a life of eight years is 12% before-tax. - The agreement of the long-term loan provides that interest is charged at 9% per annum. The current JIBAR rate for similarloans is 11% (after-tax at the tax rate for BLUE-DOT (Pty) Ltd ). - The current tax rate for companies is 28%. Calculate the current market value of BLUE-DOT (Pty) Ltd’s debentures by using your fi nancial calculator? Set your calculator atfour decimals and round your fi nal answer to the nearest rand. (a) R (b) R (c) R (d) R Select one: a. R  b. R c. R d. R Question 20 Correct Mark 3.00 out of 3.00 You are given the following information regarding Green Packaging Solutions (Pty) Ltd’s funding structure: 7 500 bonds issued with a nominal value of R1 500 each and time to maturity of 15 years. It pays an annual coupon rate of11% per annum and the current market return on similar bonds with a maturity date of 15 years is 12% per annum (pre-tax).500 000 ordinary shares are in issue with a nominal value of R45 per share. The next dividend payable will be R9 per share. Itis expected that dividends will have a long-term sustainable growth rate of 5%. The shares have a current market value of R80per share. The corporate tax rate is 28% Determine the total market value of equity for Green Packaging Solutions (Pty) Ltd? Set your calculator to four decimal placesand round the fi nal answer to the nearest rand. If slight rounding differences occur - choose the alternative that is closest toyour answer. (a) R 600 000 (b) R (c) R (d) R Select one: a. R  b. R c. R 600 000 d. R OSCAR THE TUTOR for FAC ECS MAC DSC TAX QMI FIN INV BN STA tutorials U OSCAR THE TUTOR for FAC ECS MAC DSC TAX QMI FIN INV BNU STA tutorials Started on Wednesday, 29 March 2023, 11:16 AM State Finished Completed on Wednesday, 29 March 2023, 11:45 AM Time taken 28 mins 39 secs Marks 41.00/50.00 Grade 82.00 out of 100.00 Question 1 Incorrect Mark 0.00 out of 2.00 The development of an organisation’s strategy is influenced by different internal and external environmental factors. Which ONE of the following combinations are ALL correct factors that will have an influence on the development of strategy regarding the inter nal environment of an organisation? (a) Corporate culture, technological environment, controls at organisation level and political environment. (b) Social environment, economic environment, organisational leadership, HR policies and corporate culture. (c) HR policies, controls at organisation level, industrial relations, and corporate culture. (d) Organisational leadership, political environment, competitive environment, and social environment. Select one: a. Corporate culture, technological environment, controls at organisation level and political environment. b. Organisational leadership, political environment, competitive environment, and social environment. c. Social environment, economic environment, organisational leadership, HR policies and corporate culture. d. HR policies, controls at organisation level, industrial relations, and corporate culture. - 2023 Question 2 Correct Mark 2.00 out of 2.00 Which ONE of the following explanations best describes sustainability for businesses? (a) It is when all the products, processes and manufacturing activities meet customer needs, while at the same time treating the environment in such a manner that it does not decrease the ability of future generations to meet their own needs. (b) It is the potential for long-term maintenance of wellbeing which has environmental and social dimensions. (c) It is a set of processes, customs, policies, laws, and institutions affecting the way the business is managed. (d) It is the growth of an investment in a business where the investment can be sold after a few years at a profit. Select one: a. It is when all the products, processes and manufacturing activities meet customer needs, while at the same time treating the environment in such a manner that it does not decrease the ability of future generations to meet their own needs. b. It is a set of processes, customs, policies, laws, and institutions affecting the way the business is managed. c. It is the potential for long-term maintenance of wellbeing which has environmental and social dimensions. d. It is the growth of an investment in a business where the investment can be sold after a few years at a profit. Question 3 Incorrect Mark 0.00 out of 2.00 The yield to maturity (YTM) percentage used in determining the pre-tax cost of debt financing is also . (a) The effective required return (cost) for equity instruments. (b) The effective after-tax cost of debt financing. (c) The internal rate of return (IRR) that will discount all cash flows to zero. (d) The IRR that is based on the current market value of the of debt instruments and all future after-tax cash flows. Select one: a. The effective required return (cost) for equity instruments. b. The IRR that is based on the current market value of the of debt instruments and all future after-tax cash flows. c. The internal rate of return (IRR) that will discount all cash flows to zero. d. The effective after-tax cost of debt financing. - 2023 Question 4 Correct Mark 2.00 out of 2.00 Select the combination of the following considerations that are all TRUE when an organisation needs to raise long-term capital. (1) Debt holders run the highest risk of their capital not being repaid. (2) Debt tends to have a finite life while equity tends to be part of the organisation for life. (3) Equity financing is relatively more expensive than debt financing. (4) Holders of ordinary shares do not control the organisation as they have no voting rights. (5) Interest payable on debt is deductible as a business expense for normal tax purposes. (a) Statements (1), (3) and (5) (b) Statements (1), (2) and (5) (c) Statements (2), (3) and (5) (d) Statements (2), (3) and (4) Select one: a. Statements (2), (3) and (5) b. Statements (2), (3) and (4) c. Statements (1), (3) and (5) d. Statements (1), (2) and (5) - 2023 OSCAR THE TUTOR for FAC ECS MAC DSC TAX QMI FIN INV BNU STA Question 5 Correct Mark 2.00 out of 2.00 Select the combination of the following statements regarding growth rate as applied in ratio analysis that are all TRUE. (1) Further comparison and investigation should be done when there is an increase or decrease in the growth rate for the result to be sensible. (2) Growth rate refers to the percentage that a line item in the financial information of an organisation has increased or decreased from one period to another. (3) Growth rates could not be used in conjunction with other ratios that were analysed to help clarify the results. (4) The growth rate can provide an indication of the success of an organisation’s operations over several periods or years. (5) Growth rates can only be calculated on figures in the statement of profit or loss and other comprehensive income. (a) Statements (1), (2) and (3) (b) Statement (1), (3) and (4) (c) Statements (1), (2) and (4) (d) Statement (1), (2), (3) and (5) Select one: a. Statement (1), (2), (3) and (5) b. Statement (1), (3) and (4) c. Statements (1), (2) and (4) d. Statements (1), (2) and (3) - 2023 Question 6 Incorrect Mark 0.00 out of 2.00 A strategic plan contains different goals. Identify the term used for having short-term easily achievable, medium-term more difficult to achieve as well as long-term very high goals included within other goal/(s). (a) Goal congruency (b) Goal planning (c) Goal sequencing (d) Goal hierarchy Select one: a. Goal congruency b. Goal planning c. Goal sequencing d. Goal hierarchy - 2023 Question 7 Correct Mark 2.00 out of 2.00 The role of financial managers shifted from being scorekeepers. Since this shift the focus of the financial manager became ? (a) the acquiring of funds as well as the use of these funds by applying general management principles. (b) the planning, organising and control of the financial activities of a business. (c) the management and control of money and money-related operations within a business. (d) to contribute with his/her financial knowledge and skills towards the long-term creation of sustainable wealth for the owners/investors of the business. Select one: a. the acquiring of funds as well as the use of these funds by applying general management principles. b. the planning, organising and control of the financial activities of a business. c. to contribute with his/her financial knowledge and skills towards the long-term creation of sustainable wealth for the owners/investors of the business. d. the management and control of money and money-related operations within a business. - 2023 Question 8 Correct Mark 2.00 out of 2.00 Select the correct explanation for capital structure, from the options below. (a) It is the money the organisation has on hand (including petty cash, unbanked payments received) as well as the money in the bank (including cheque accounts or short-term deposits). (b) It describes the annual return or compensation earned on an investment. (c) It refers to the controlling of balances included in the current assets and current liabilities, the way the related functions within the organisation are performed and the way working capital is financed. (d) It is the manner in which an organisation’s non-current assets are financed and is normally expressed in percentages of each type of capital used by the organisation. Select one: a. It refers to the controlling of balances included in the current assets and current liabilities, the way the related functions within the organisation are performed and the way working capital is financed. b. It is the money the organisation has on hand (including petty cash, unbanked payments received) as well as the money in the bank (including cheque accounts or short-term deposits). c. It describes the annual return or compensation earned on an investment. d. It is the manner in which an organisation’s non-current assets are financed and is normally expressed in percentages of each type of capital used by the organisation. Question 9 Correct Mark 2.00 out of 2.00 Which ONE of the following is NOT a strategic aim of corporate governance? (a) To reduce costs within the organisation to boost short-term profitability. (b) To improve investor confidence in the organisation. (c) To increase the organisation’s transparency to stakeholders. (d) To ensure that the organisation abides with relevant laws and acts ethically. Select one: a. To improve investor confidence in the organisation. b. To ensure that the organisation abides with relevant laws and acts ethically c. To increase the organisation’s transparency to stakeholders. d. To reduce costs within the organisation to boost short-term profitability. - 2023 OSCAR THE TUTOR for FAC ECS MAC DSC TAX QMI FIN INV BNU STA tutorials Question 10 Correct Mark 2.00 out of 2.00 Select the concept that can be explained as being ‘a set of processes, customs, policies, laws, and institutions affecting th e way that a business is managed and that includes the relationships among the many stakeholders involved with an organisation and the goal of the business’: (a) Memorandum of incorporation (MOI) (b) Corporate governance (c) Sustainability for businesses (d) Strategic financial management Select one: a. Strategic financial management b. Corporate governance c. Sustainability for businesses d. Memorandum of incorporation (MOI) - 2023 OSCAR THE TUTOR for FAC ECS MAC DSC TAX QMI FIN INV BNU STA tutorials Question 11 Incorrect Mark 0.00 out of 3.00 Use the following information as on 28 February 2023 for EXMART Ltd. Total Current assets = R Total Current liabilities = R Total assets = R Inventory = R Revenue = R Cost of sales = R EBIT = R Interest expense = R Net profit = R 754 000 Number of shares issued = 1000 000 Dividend per share = 20 cents Sales on credit = 60% of revenue REQUIRED: Calculate the Current ratio for EXMART Ltd as at 28 February 2023. Set your calculator on four decimal places for calculations and round your final answer to two decimal places. If slight rounding differences occur - choose the alternative that is closest to your answer. (a) 144,6% (b) 1: 0,69 (c) 1,45: 1 (d) 2,16 times Select one: a. 2,16 times b. 1: 0,69 c. 144,6% d. 1,45: 1 - 2023 Question 12 Correct Mark 3.00 out of 3.00 Use the following information as on 31 March 2022 for Perfect-Pizzas Ltd. Total equity = R Ordinary share capital = R (Note 1) Non-current liabilities = R 12% Debentures = R (Note 2) Long-term loan = R (Note 3) Current liabilities = R Total equity and liabilities = R Notes & Additional information 1) The historical issue price of ordinary shares is 375 cents. The latest known share price is 938 cents. Perfect-Pizza’s Ltd has just declared and paid a dividend of 34 cents. In line with its stable annual growth, the company is expecting to declare a dividend of 40 cents for the year ended 31 March 2023. The government bonds (risk-free rate) currently yield 8,21%, and the company’s beta is estimated at 1,3 while the market risk premium is 8,5%. 2) Similar debentures are trading at 10% per annum. The interest is payable annually in arrears and the redemption date of these debentures is after five years. 3) The long-term loan is repayable in three years’ time and carries an interest rate of prime rate + 2%. The current prime rate is 10,5% The current effective tax rate is 28%. All percentages given are before tax, unless where otherwise stated. REQUIRED: Calculate the Cost of equity of Perfect-Pizzas Ltd. Set your calculator on four decimal places for calculations and round your final answer to two decimal places. If slight rounding differences occur - choose the alternative that is closest to your answer. (a) R (b) R (c) R (d) R Select one: a. R b. R c. R d. R - 2023 Question 13 Correct Mark 3.00 out of 3.00 Use the following information as on 31 March 2022 for Perfect-Pizzas Ltd. Total equity = R Ordinary share capital = R (Note 1) Non-current liabilities = R 12% Debentures = R (Note 2) Long-term loan = R (Note 3) Current liabilities = R Total equity and liabilities = R Notes & Additional information 1) The historical average issue price of ordinary shares is 375 cents. The latest known share price is 938 cents. Perfect-Pizza’s Ltd has just declared and paid a dividend of 34 cents. In line with its stable annual growth, the company is expecting to declare a dividend of 40 cents for the year ended 31 March 2023. The government bonds (risk-free rate) currently yield 8,21%, and the company’s beta is estimated at 1,3 while the market risk premium is 8,5%. 2) Similar debentures are trading at 10% per annum. The interest is payable annually in arrears and the redemption date of these debentures is after five years. 3) The long-term loan is repayable in three years’ time and carries an interest rate of prime rate + 2%. The current prime rate is 10,5% The current effective tax rate is 28%. All percentages given are before tax, unless where otherwise stated. REQUIRED: Calculate the Cost of equity of Perfect-Pizzas Ltd. Set your calculator on four decimal places for calculations and round your final answer to two decimal places. If slight rounding differences occur - choose the alternative that is closest to your answer. (a) 21,91% (b) 21,25% (c) 16,26% (d) 15,62% Select one: a. 16,26% b. 21,91% c. 15,62% d. 21,25% - 2023 OSCAR THE TUTOR for FAC ECS MAC DSC TAX QMI FIN INV BNU STA tutorial Question 14 Correct Mark 3.00 out of 3.00 Use the following information as on 31 March 2023 for MAC-D Ltd. Share capital = R64 000 Retained earnings = R55 000 Net Profit = R32 000 EBIT = R50 000 Interest expense = R2 000 Total Equity = R119 000 Total assets = R152 000 Total liabilities (debt) = R33 000 REQUIRED: Calculate the Interest Cover ratio for MAC-D Ltd. Set your calculator on four decimal places and round your final answer to two decimal places. If slight rounding differences occur - choose the alternative that is closest to your answer. (a) 75,00 times (b) 50: 2 (c) 25,00% (d) 25,00 times Select one: a. 75,00 times b. 50: 2 c. 25,00 times d. 25,00% - 2023 OSCAR THE TUTOR for FAC ECS MAC DSC TAX QMI FIN INV BNU STA tutorials Question 15 Correct Mark 3.00 out of 3.00 You are given the following information for Elancyl (Pty) Ltd. Book value of long-term loan R Market value of debentures R Market value of ordinary shares R Market interest rate of debentures (pre-tax) 11% Market rate for similar long-term loans (pre-tax) 9% Shareholders required rate of return 13% REQUIRED: Determine the after-tax cost for the debentures and the long-term loan of Elancyl (Pty) Ltd respectively. Set your calculator at four decimal places and round the final answers to two decimal places. Slight rounding differences may occur - choose the alternative that is closest to your answer. (a) Debentures 11,00% and long-term loan 6,48% (b) Debentures 7,92% and long-term loan 9,00% (c) Debentures 11,00% and long-term loan 9,00% (d) Debentures 7,92% and long-term loan 6,48% Select one: a. Debentures 11,00% and long-term loan 9,00% b. Debentures 7,92% and long-term loan 6,48% c. Debentures 7,92% and long-term loan 9,00% d. Debentures 11,00% and long-term loan 6,48% - 2023 Question 16 Correct Mark 3.00 out of 3.00 You are given the following information of Legal-gun-traders (Pty) Ltd. The current market price per share on 1 June 2022 is R14,82. A dividend of R2,40 has been declared and paid during the previous financial year, ending 31 May 2022. It is expected that dividends will grow at a constant rate of 5% per year for the foreseeable future. The market rate of return is 16%, the risk-free rate is 8,5% and the beta is 1,8. The company holds R2 000 (face value) debentures which are redeemable after six years at face value. The annual interest payment on the debentures (coupon rate) is 12%. The current market return for similar debentures with a life of six years is 11%. Assume the current company tax rate is 28% REQUIRED: Determine the current cost of equity (%) for Legal-gun-traders (Pty) Ltd. You have to use the capital asset pricing module (CAPM). Set your calculator at four decimal places and round your final answer to two decimal places. (a) 20,00% (b) 22,00% (c) 29,50% (d) 37,30% Select one: a. 20,00% b. 22,00% c. 29,50% d. 37,30% - 2023 OSCAR THE TUTOR for FAC ECS MAC DSC TAX QMI FIN INV BNU ST tutorials A Question 17 Correct Mark 3.00 out of 3.00 Use the following information as on 31 March 2023 for MAC-D Ltd. Share capital = R 64 000 Retained earnings = R 55 000 Net Profit = R 32 000 EBIT = R 50 000 Interest expense = R 2 000 Total Equity = R119 000 Total assets = R152 000 Total liabilities (debt) = R 33 000 REQUIRED: Calculate the Return on Equity ratio for MAC-D Ltd. Set your calculator on four decimal places and round your final answer to two decimal places. If slight rounding differences occur - choose the alternative that is closest to your answer. (a) 18,00% (b) 26,89% (c) 23,00% (d) 26,89 times Select one: a. 26,89% b. 23,00% c. 18,00% d. 26,89 times - 2023 Question 18 Correct Mark 3.00 out of 3.00 VIP electrical has a debt: equity ratio of 45: 55 and has a total capital of R600 million. The current cost of debt (after tax) is 8% and that of equity is 15%. Calculate the weighted average cost of capital (WACC) of VIP electrical. Set your calculator at four decimals and round your final answer to two decimal places. Slight rounding differences may occur - choose the alternative that is closest to your answer. (a) 10,05% (b) 10,65% (c) 11,15% (d) 11,85% Select one: a. 11,85% b. 10,65% c. 10,05% d. 11,15% Question 19 Correct Mark 3.00 out of 3.00 Use the following information to calculate the growth rate for revenue and for operating cost respectively: Revenue of current period = R980 million - (previous period was R780 million). Operating cost current period = R23 000 million – (previous period was R55 million). (a) Revenue -25,64% (decline); Operating cost 58,18% (growth or increase) (b) Revenue 25,64% (growth or increase); Operating cost -58,18% (decline) (c) Revenue 20,41% growth or increase); Operating cost -139,13 (decline) (d) Revenue -20,41% (decline); Operating cost 139,13% (growth or increase) Select one: a. Revenue 25,64% (growth or increase); Operating cost -58,18% (decline) b. Revenue 20,41% growth or increase); Operating cost -139,13 (decline) c. Revenue -25,64% (decline); Operating cost 58,18% (growth or increase) d. Revenue -20,41% (decline); Operating cost 139,13% (growth or increase) - 2023 OSCAR THE TUTOR for FAC ECS MAC DSC TAX QMI FIN INV BNU STA tutorials ◄ Assessment 1 Jump to... Question 20 Correct Mark 3.00 out of 3.00 Use the following information of Dump-it Ltd. Operating profit = R Profit after interest and tax = R Ordinary dividend paid = R Total debt = R Total equity = R Total assets = R Number of shares issued = Current market price per share = R35 REQUIRED: Calculate the Earnings per Share (EPS) for Dump-it. (a) 19,71 cents (b) 540 cents (c) 690 cents (d) 1 080 cents Select one: a. 19,71 cents b. 1 080 cents c. 690 cents d. 540 cents - 2023 Started on Wednesday, 29 March 2023, 7:28 AM State Finished Completed on Wednesday, 29 March 2023, 8:02 AM Time taken 33 mins 40 secs Marks 37.00/50.00 Grade 74.00 out of 100.00 Question 1 Incorrect Mark 0.00 out of 2.00 BLUERAY Equipment (Pty) Ltd needs further financing to expand their operations. Which ONE of the following is NOT an example of how BLUERAY Equipment (Pty) Ltd can raise money externally? (a) Borrowing money from their bank. (b) Retaining their operating cash flow. (c) Borrowing from their creditors. (d) Borrowing money from a financial institution. Select one: a. Borrowing money from a financial institution. b. Borrowing money from their bank. c. Borrowing from their creditors. d. Retaining their operating cash flow. - 2023 Question 2 Correct Mark 2.00 out of 2.00 Select the concept that can be explained as being „a set of processes, customs, policies, laws, and institutions affecting the way that a business is managed and that includes the relationships among the many stakeholders involved with an organisation and the goal of the business‟: (a) Memorandum of incorporation (MOI) (b) Corporate governance (c) Sustainability for businesses (d) Strategic financial management Select one: a. Corporate governance b. Memorandum of incorporation (MOI) c. Sustainability for businesses d. Strategic financial management Question 3 Correct Mark 2.00 out of 2.00 When businesspeople refer to the principle “cradle to the grave”, they are referring to the business concept of . (a) Sustainability (b) Life cycle stages of an organisation (c) Corporate culture (d) Agency theory Select one: a. Life cycle stages of an organisation b. Agency theory c. Corporate culture d. Sustainability - 2023 Question 4 Correct Mark 2.00 out of 2.00 Select the combination of the following considerations that are all TRUE when an organisation needs to raise long-term capital. (1) Debt holders run the highest risk of their capital not being repaid. (2) Debt tends to have a finite life while equity tends to be part of the organisation for life. (3) Equity financing is relatively more expensive than debt financing. (4) Holders of ordinary shares do not control the organisation as they have no voting rights. (5) Interest payable on debt is deductible as a business expense for normal tax purposes. (a) Statements (1), (3) and (5) (b) Statements (1), (2) and (5) (c) Statements (2), (3) and (5) (d) Statements (2), (3) and (4) Select one: a. Statements (1), (2) and (5) b. Statements (1), (3) and (5) c. Statements (2), (3) and (5) d. Statements (2), (3) and (4) Question 5 Correct Mark 2.00 out of 2.00 When a company applies to be listed on a stock exchange for the first time it is referred to as ? (a) A secondary market transaction (b) A money market transaction (c) An initial public offering (d) A private placement Select one: a. An initial public offering b. A money market transaction c. A secondary market transaction d. A private placement - 2023 Question 6 Correct Mark 2.00 out of 2.00 Which ONE of the following is NOT a strategic aim of corporate governance? (a) To reduce costs within the organisation to boost short-term profitability. (b) To improve investor confidence in the organisation. (c) To increase the organisation‟s transparency to stakeholders. (d) To ensure that the organisation abides with relevant laws and acts ethically. Select one: a. To ensure that the organisation abides with relevant laws and acts ethically b. To increase the organisation‟s transparency to stakeholders. c. To reduce costs within the organisation to boost short-term profitability. d. To improve investor confidence in the organisation. Question 7 Correct Mark 2.00 out of 2.00 The role of financial managers shifted from being scorekeepers. Since this shift the focus of the financial manager became ? (a) the acquiring of funds as well as the use of these funds by applying general management principles. (b) the planning, organising and control of the financial activities of a business. (c) the management and control of money and money-related operations within a business. (d) to contribute with his/her financial knowledge and skills towards the long-term creation of sustainable wealth for the owners/investors of the business. Select one: a. the management and control of money and money-related operations within a business. b. to contribute with his/her financial knowledge and skills towards the long-term creation of sustainable wealth for the owners/investors of the business. c. the planning, organising and control of the financial activities of a business. d. the acquiring of funds as well as the use of these funds by applying general management principles. - 2023 Question 8 Correct Mark 2.00 out of 2.00 After successfully completing your degree, you have just started working at a company. You have noticed the following as per the list below. (1) Staff have access to a wide range of information including details of client accounts, to enable good client service. (2) The organisation has a graduate program, whereby they offer bursaries to students and then employ them as trainees once they have completed their studies. (3) A free annual holiday is given to all directors, and this is not declared as it is not in the form of a cash payment. (4) Sometimes, but not very often, if there is a large expense the company will capitalise it, but only it if is over R100 000. Which of the above actions adhere to good corporate governance? (a) Statements (1), (2), and (4) (b) Statements (1), (2), and (3) (c) Statement (2) and (3) (d) Statement (2) only Select one: a. Statement (2) only b. Statements (1), (2), and (3) c. Statement (2) and (3) d. Statements (1), (2), and (4 Question 9 Incorrect Mark 0.00 out of 2.00 The yield to maturity (YTM) percentage used in determining the pre-tax cost of debt financing is also . (a) The effective required return (cost) for equity instruments. (b) The effective after-tax cost of debt financing. (c) The internal rate of return (IRR) that will discount all cash flows to zero. (d) The IRR that is based on the current market value of the of debt instruments and all future after-tax cash flows. Select one: a. The IRR that is based on the current market value of the of debt instruments and all future after-tax cash flows. b. The effective required return (cost) for equity instruments. c. The internal rate of return (IRR) that will discount all cash flows to zero. d. The effective after-tax cost of debt financing. - 2023 Question 10 Correct Mark 2.00 out of 2.00 Select the combination of the following statements regarding growth rate as applied in ratio analysis that are all TRUE. (1) Further comparison and investigation should be done when there is an increase or decrease in the growth rate for the result to be sensible. (2) Growth rate refers to the percentage that a line item in the financial information of an organisation has increased or decreased from one period to another. (3) Growth rates could not be used in conjunction with other ratios that were analysed to help clarify the results. (4) The growth rate can provide an indication of the success of an organisation‟s operations over several periods or years. (5) Growth rates can only be calculated on figures in the statement of profit or loss and other comprehensive income. (a) Statements (1), (2) and (3) (b) Statement (1), (3) and (4) (c) Statements (1), (2) and (4) (d) Statement (1), (2), (3) and (5) Select one: a. Statement (1), (3) and (4) b. Statements (1), (2) and (3) c. Statements (1), (2) and (4) d. Statement (1), (2), (3) and (5) - 2023 Question 11 Correct Mark 3.00 out of 3.00 You are given the following information of Legal-gun-traders (Pty) Ltd. The current market price per share on 1 June 2022 is R14,82. A dividend of R2,40 has been declared and paid during the previous financial year, ending 31 May 2022. It is expected that dividends will grow at a constant rate of 5% per year for the foreseeable future. The market rate of return is 16%, the risk-free rate is 8,5% and the beta is 1,8. The company holds R2 000 (face value) debentures which are redeemable after six years at face value. The annual interest payment on the debentures (coupon rate) is 12%. The current market return for similar debentu