FIN3702 Assignment 2 (COMPLETE ANSWERS) Semester 2 2024 (215721)- DUE 30 September 2024

,FIN3702 Assignment 2 (COMPLETE ANSWERS)
Semester 2 2024 (215721)- DUE 30 September
2024 ; 100% TRUSTED Complete, trusted solutions
and explanations.
Question 1 Not yet answered Marked out of 1.00 Question 2
Not yet answered Marked out of 1.00 QUIZ The information
below applies to the next four questions. Extracted statement
of fi nancial position for AB Pharmacies Ltd Assets Equity &
Liabilities Current assets R10 000 Current liabilities R5 000 Fixed
assets R20 000 Long-term debt R12 000 Equity R13 000 Total
R30 000 Total R30 000 The company earns 5% on current assets
and 15% on fi xed assets. The fi rm’s current liabilities cost 7%
to maintain and theaverage annual cost of long-term funds is
20%.
To answer the questions related to the financial position of AB
Pharmacies Ltd, let's start by breaking down the information
provided and performing some calculations.
Given Information:
1. Assets:
o Current Assets: R10,000
o Fixed Assets: R20,000
o Total Assets: R30,000
2. Equity & Liabilities:
o Current Liabilities: R5,000

, o Long-term Debt: R12,000
o Equity: R13,000
o Total Liabilities & Equity: R30,000
3. Cost and Returns:
o Earnings on Current Assets: 5%
o Earnings on Fixed Assets: 15%
o Cost to maintain Current Liabilities: 7%
o Cost of Long-term Debt: 20%
Calculations:
1. Earnings from Assets:
o Earnings from Current Assets = 5% of R10,000 = R500
o Earnings from Fixed Assets = 15% of R20,000 = R3,000
2. Total Earnings:
o Total Earnings = R500 + R3,000 = R3,500
3. Costs of Liabilities:
o Cost of Current Liabilities = 7% of R5,000 = R350
o Cost of Long-term Debt = 20% of R12,000 = R2,400
4. Total Costs:
o Total Costs = R350 + R2,400 = R2,750
Net Profit Calculation: