MAC3703 Assignment 2 (QUALITY ANSWERS) Semester 1 2025

MAC3703
Assignment 2 Semester 1 2025

Unique number: 520743

Due Date: 30 April 2025


This document includes:

 Helpful answers and guidelines
 Detailed explanations and/ or calculations
 References




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, QUESTION 1

a.
DATE CALCULATION WEIGHTED SHARES
01-Jan-20 50,000 × 12/12 50,000
01-Mar-20 50,000 x 1/5 rights shares × 10/12 8,333
01-May-20 10,000 new shares issued × 8/12 6,667
Total 65,000



Basic Earnings per Share

= 7 200/65 000

= 0.1108



Diluted Earnings Per Share

CONVERTIBLE DEBENTURES

 2,000 debentures × 5 shares = 10,000 shares (potentially added)
Adjusted shares: 65,000 + 10,000 =75 000

 Annual interest = R25,000 × 10% = R2,500
 After-tax interest saved = R2,500 × (1 - 0.28) = R1,800
Adjusted Earnings = 7,200 + 1,800 = 9,000



SHARE OPTIONS (5,000 @ R3.80)

Use treasury stock method:

 Option proceeds = 5,000 × R3.80 = R19,000
 Shares that could be repurchased at market value of R4.15 = R19,000
/ 4.15 = 4,578 shares
 Net increase in shares = 5,000 - 4,578 = 422
Total diluted shares = 75,000 + 422 = 75,422




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