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FIN3701
ASSIGNMENT 2
2024
This document contains
questions, suggested solutions
and detailed expanations for
FIN3701 Assignment 2 (505104)
Semester 1
Compiled using :
SEARCHABLE Principles of Managerial Finance: Global and
Southern African Perspective. 2021. 2nd
edition:Gitman, LJ, Beaumont-Smith, M,
Hall, J, Marx, J, Strydom, B & Van der Merwe,
UPDATED A.
QUESTIONS & MEMO ANSWERS INCLUDED
, SOLUTIONS TO ASSIGNMENT 02
QUESTION 1 [10 marks]
QUESTION 1.1 (8 marks)
Calculator:
PV -3.14
FV 3.95
N 3
I/YR (growth rate) 8%
D2021 =D1 = D0 (1 + g) = 3.95 (1.08) = 4.27
D2022 =D1 = D0 (1 + g) = 4.27 (1.10) = 4.70
D2023 =D1 = D0 (1 + g) = 4.70 (1.10) = 5.17
Ks = 15% (given)
G = 10% (given)
P2021 = D1
(ks-g)
= 5.17 / (15%-10%)
= R103
QUESTION 1.2 (2 marks)
Bonga should not purchase the shares because the share price is higher than R52.
FIN3701
ASSIGNMENT 2
2024
This document contains
questions, suggested solutions
and detailed expanations for
FIN3701 Assignment 2 (505104)
Semester 1
Compiled using :
SEARCHABLE Principles of Managerial Finance: Global and
Southern African Perspective. 2021. 2nd
edition:Gitman, LJ, Beaumont-Smith, M,
Hall, J, Marx, J, Strydom, B & Van der Merwe,
UPDATED A.
QUESTIONS & MEMO ANSWERS INCLUDED
, SOLUTIONS TO ASSIGNMENT 02
QUESTION 1 [10 marks]
QUESTION 1.1 (8 marks)
Calculator:
PV -3.14
FV 3.95
N 3
I/YR (growth rate) 8%
D2021 =D1 = D0 (1 + g) = 3.95 (1.08) = 4.27
D2022 =D1 = D0 (1 + g) = 4.27 (1.10) = 4.70
D2023 =D1 = D0 (1 + g) = 4.70 (1.10) = 5.17
Ks = 15% (given)
G = 10% (given)
P2021 = D1
(ks-g)
= 5.17 / (15%-10%)
= R103
QUESTION 1.2 (2 marks)
Bonga should not purchase the shares because the share price is higher than R52.
