lOMoAR cPSD| 42036583
, lOMoAR cPSD| 42036583
MAC3702
OCTOBER/NOVEMBER 2023
UNIVERSITY EXAMINATIONS
October /November 2023
MAC3702
Application of Financial Management Techniques
100 Marks
Duration 3 Hours
30 minutes for uploading (submission cut-off time)
EXAMINATION PANEL AS APPOINTED BY THE DEPARTMENT
Use of a non-programable pocket calculator is permissible.
This is a closed-book examination.
The examination question paper remains the property of the University of South Africa and
may not be distributed beyond its intended use for this examination.
THIS PAPER CONSISTS OF THIRTEEN (13) PAGES IN TOTAL.
THIS IS NOT AN OPEN BOOK EXAM! YOU ARE NOT ALLOWED TO COPY FROM ANY
SOURCES INCLUDING YOUR TEXTBOOK OR TUTORIAL LETTERS.
EXAM QUESTION PAPER - INSTRUCTIONS:
Please note:
1. This paper consists of TWO (2) independent questions.
2. You are strongly advised to carefully read the REQUIRED before attempting the
questions concerned.
3. All question sections must be answered.
4. All calculations must be shown.
5. Each question section attempted must commence on a new (separate) page.
6. Include (write/type) your student number in the document/answer file.
PROPOSED TIMETABLE FOR THIS EXAM:
CONTENTS
TIME
QUESTION TOPICS MARKS
Minutes
1 Analysis of information; Quantitative and
qualitative considerations; Ethics; Valuations and 50 90
Risk Assessment.
2 Capital budgeting; Quantitative and qualitative
considerations; Weighted average cost of capital; 50 90
Forms and sources of finance;
, lOMoAR cPSD| 42036583
MAC3702
OCTOBER/NOVEMBER 2023
Uploading time 30
TOTAL 100 210
QUESTION 1 (50 Marks 90 minutes)
Gaoke (Pty) Ltd is a family business that is owned by the two Gaoke brothers (Fredirick and
Rassie). The company manufactures and distributes Bluetooth speakers to retailers. The
Gaoke speakers are known among consumers as high-quality speakers that produce
exceptional sound.
The business has been in existence for more than twenty years and was founded by Mr.
Marius Gaoke (“Marius”) who is Fredirick and Rassie’s father. Marius has recently retired and
entrusted his two sons with the business to manage and to own it. Fredirick is eager to manage
and expand the company. His vision for the company is to employ non-family members as top
management and to constitute a board of directors. Members to be appointed to the board will
be independent of both the family and the business. Rassie, on the other hand, intends to
emigrate to United Arab Emirates and is interested in selling the business and equally splitting
the proceeds with Fredirick.
Fredirick just returned to South Africa after studying overseas. He employed a management
accountant to assist him with the company's performance analysis and valuation. His
immediate concern is the liquidity and profitability of the company. He has managed to obtain
the following information about the company from his brother.
1. The company is heavily reliant on machines that consume a lot of electricity. Eskom
recently informed the company that, due to the high level of power usage especially in the
current year, Eskom would be instituting an additional fee for electricity used beyond a
particular threshold. Additionally, the company is under pressure from environmental lobby
groups who have requested a meeting with the company in order to discuss potential
solutions to combat excessive electricity consumption. In the past, Marius had disregarded
these lobby organisations, referring to them as a nuisance.
2. Marius considered the company as a family business and has always desired to limit
company leadership to himself and his two sons. Employees within the company are
unhappy with this strategy, with some claiming that there are no career advancement
opportunities for women and non-family members. The company does not have a Broad
Based Black Economic Empowerment (“BBBEE’) certificate and has never contemplated
obtaining one or complying with the BBBEE legislation since the majority of the company's
customers do not require the certificate as a necessity to conduct business with the
company.
3. The South African Revenue Services (SARS) has sent a letter to the company stating that,
as a result of the audit conducted, the company leadership and some of its employees
have been utilising the company to pay for their personal costs and the company has
claimed a tax deduction on these expenses. SARS rejected all these deductions and
imposed penalties on the amounts that were initially deducted. SARS levied penalties of
R100 000 towards the company and R50 000 for each staff member involved in their
personal capacity.
, lOMoAR cPSD| 42036583
MAC3702
OCTOBER/NOVEMBER 2023
4. The company administration staff works in a very old and poorly maintained building.
There are cracks in the walls, and several areas of this facility are off-limits to staff
members due to its poor condition. The water pipelines in the building are also ancient,
and the business has experience significant water leaks that are very costly for the
company.
, lOMoAR cPSD| 42036583
MAC3702
OCTOBER/NOVEMBER 2023
UNIVERSITY EXAMINATIONS
October /November 2023
MAC3702
Application of Financial Management Techniques
100 Marks
Duration 3 Hours
30 minutes for uploading (submission cut-off time)
EXAMINATION PANEL AS APPOINTED BY THE DEPARTMENT
Use of a non-programable pocket calculator is permissible.
This is a closed-book examination.
The examination question paper remains the property of the University of South Africa and
may not be distributed beyond its intended use for this examination.
THIS PAPER CONSISTS OF THIRTEEN (13) PAGES IN TOTAL.
THIS IS NOT AN OPEN BOOK EXAM! YOU ARE NOT ALLOWED TO COPY FROM ANY
SOURCES INCLUDING YOUR TEXTBOOK OR TUTORIAL LETTERS.
EXAM QUESTION PAPER - INSTRUCTIONS:
Please note:
1. This paper consists of TWO (2) independent questions.
2. You are strongly advised to carefully read the REQUIRED before attempting the
questions concerned.
3. All question sections must be answered.
4. All calculations must be shown.
5. Each question section attempted must commence on a new (separate) page.
6. Include (write/type) your student number in the document/answer file.
PROPOSED TIMETABLE FOR THIS EXAM:
CONTENTS
TIME
QUESTION TOPICS MARKS
Minutes
1 Analysis of information; Quantitative and
qualitative considerations; Ethics; Valuations and 50 90
Risk Assessment.
2 Capital budgeting; Quantitative and qualitative
considerations; Weighted average cost of capital; 50 90
Forms and sources of finance;
, lOMoAR cPSD| 42036583
MAC3702
OCTOBER/NOVEMBER 2023
Uploading time 30
TOTAL 100 210
QUESTION 1 (50 Marks 90 minutes)
Gaoke (Pty) Ltd is a family business that is owned by the two Gaoke brothers (Fredirick and
Rassie). The company manufactures and distributes Bluetooth speakers to retailers. The
Gaoke speakers are known among consumers as high-quality speakers that produce
exceptional sound.
The business has been in existence for more than twenty years and was founded by Mr.
Marius Gaoke (“Marius”) who is Fredirick and Rassie’s father. Marius has recently retired and
entrusted his two sons with the business to manage and to own it. Fredirick is eager to manage
and expand the company. His vision for the company is to employ non-family members as top
management and to constitute a board of directors. Members to be appointed to the board will
be independent of both the family and the business. Rassie, on the other hand, intends to
emigrate to United Arab Emirates and is interested in selling the business and equally splitting
the proceeds with Fredirick.
Fredirick just returned to South Africa after studying overseas. He employed a management
accountant to assist him with the company's performance analysis and valuation. His
immediate concern is the liquidity and profitability of the company. He has managed to obtain
the following information about the company from his brother.
1. The company is heavily reliant on machines that consume a lot of electricity. Eskom
recently informed the company that, due to the high level of power usage especially in the
current year, Eskom would be instituting an additional fee for electricity used beyond a
particular threshold. Additionally, the company is under pressure from environmental lobby
groups who have requested a meeting with the company in order to discuss potential
solutions to combat excessive electricity consumption. In the past, Marius had disregarded
these lobby organisations, referring to them as a nuisance.
2. Marius considered the company as a family business and has always desired to limit
company leadership to himself and his two sons. Employees within the company are
unhappy with this strategy, with some claiming that there are no career advancement
opportunities for women and non-family members. The company does not have a Broad
Based Black Economic Empowerment (“BBBEE’) certificate and has never contemplated
obtaining one or complying with the BBBEE legislation since the majority of the company's
customers do not require the certificate as a necessity to conduct business with the
company.
3. The South African Revenue Services (SARS) has sent a letter to the company stating that,
as a result of the audit conducted, the company leadership and some of its employees
have been utilising the company to pay for their personal costs and the company has
claimed a tax deduction on these expenses. SARS rejected all these deductions and
imposed penalties on the amounts that were initially deducted. SARS levied penalties of
R100 000 towards the company and R50 000 for each staff member involved in their
personal capacity.
, lOMoAR cPSD| 42036583
MAC3702
OCTOBER/NOVEMBER 2023
4. The company administration staff works in a very old and poorly maintained building.
There are cracks in the walls, and several areas of this facility are off-limits to staff
members due to its poor condition. The water pipelines in the building are also ancient,
and the business has experience significant water leaks that are very costly for the
company.
