Started on Wednesday, 7 June 2023, 7:47 PM
State Finished
Completed on Wednesday, 7 June 2023, 7:11 PM
Time taken 33 mins 15 secs
Marks 48.00/50.00
Grade 96.00 out of 100.00
Question 1
Correct
Mark 3.00 out of 3.00
Info-Masters Ltd. is funded by both equity and debt. See extract from their financial statements and other information below.
Instrument Book value [R’millions]
Long-term debt 100
Redeemable preference shares 50
Ordinary shares (R10 each) 150
-The ordinary shares are currently trading at R20 per share. The return on a fully diversified portfolio on the JSE is 15%.
-The preference shares (redeemable in 6 years) were issued with a dividend yield of 14%. Similar instruments are currently yielding 12% in
the open market.
-The long-term debt is in the form of 10% debentures, redeemable after 6 years. The current market yield on similar instruments, with a life
of six years, is 11%.
-The current risk-free rate is 10% and the beta of the company is estimated at 1,2.
- The current effective tax rate is 28%.
REQUIRED:
Calculate the total market value of the long-term debt of Info-Masters Ltd. [Set your calculator on four decimal places and round your final
answer to the nearest rand. If slight rounding differences occur - choose the alternative that is closest to your answer.]
Sarah obtained a loan of R250 000 to fund her new business venture. According to the loan agreement the loan must be repaid over the
Dashboard / Courses / UNISA / 2023 / Semester 1 / MAC2602-23-S1 / Welcome Message / Assessment 6
next six years, payable quarterly at an interest rate of 8% per annum.
REQUIRED:
Calculate the quarterly repayment amount due by Sarah by using the mathematical formula or financial calculator. [Use four decimal places
for your calculations and round your final answer to the nearest rand. Slight rounding differences may occur depending on which method
was used, choose the option closest to your answer.]
(a) R17 674
Info-Masters Ltd. is funded by both equity and debt. See extract from their financial statements and other information below.
Dashboard / Courses / UNISA / 2023 / Semester 1 / MAC2602-23-S1 / Welcome Message / Assessment 6
Instrument Book value [R’millions]
Long-term debt 100
Redeemable preference shares 50
Ordinary shares (R10 each) 150
-The ordinary shares are currently trading at R20 per share. The return on a fully diversified portfolio on the JSE is 15%.
-The preference shares (redeemable in 6 years) were issued with a dividend yield of 14%. Similar instruments are currently yielding 12% in
the open market.
-The long-term debt is in the form of 10% debentures, redeemable after 6 years. The current market yield on similar instruments, with a life
of six years, is 11%.
-The current risk-free rate is 10% and the beta of the company is estimated at 1,2.
- The current effective tax rate is 28%.
REQUIRED:
Calculate the total market value of the ordinary shares of Info-Masters Ltd. [Set your calculator on four decimal places and round your final
answer to the nearest rand. If slight rounding differences occur - choose the alternative that is closest to your answer.]
(a) R 3 448 295
Use the following information about Fast Shearing (Pty) Ltd. They consider buying new electronic shearing equipment. They have gathered
Dashboard / Courses / UNISA / 2023 / Semester 1 / MAC2602-23-S1 / Welcome Message / Assessment 6
information on two possible options, equipment Zipper or equipment Rambo. The following information regarding the equipment is
available:
Equipment
Zipper Rambo
Cost price R15 600 R18 900
Working capital required R2 000 R2 300
Net operating income before tax R5 940 R6 220
Realisable value at end of useful life - current R1 000 R1 100
Useful life 6 years 6 years
Additional information:
1. Taxation:
Tax deductible wear and tear allowances are calculated on the straight-line method at 20% per annum, on the cost of the asset. Normal
income tax rate - 28%
2. In determining net operating income, depreciation has not been taken into account. The accounting policy of the company is to
provide for depreciation in accordance with wear and tear allowed by SARS.
3. Management requires a 17% after-tax return on all capital investments.
4. Assume that all cash flows occur at the end of each year, except the initial capital outlays, which occur at the beginning of year one.
REQUIRED:
Calculate the Present value factor at 17% for machine Rambo in year 6 [Set your calculator on four decimal places and round only rand
values to the nearest rand].
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller ExpertAcademy. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $4.69. You're not tied to anything after your purchase.