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MAC3761 Exam 10 November 2023 Solutions (90% +)
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MAC3761 Exam 10 November 2023 Solutions (90% +)
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By: robynreesberg • 8 months ago
This document is incomplete and does not provide answers for all the question from the exam
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b) Capital strcture Book value WeightOrdinary shares (824 + 133 + 2 055) 3 012 60.86%
Preference shares 745 15.05%
Long-term loan 600 12.12%
9,75% Debentures 592 11.96%
4 949 100.00%
The capital structure has 61% Equity and 39% debt.
Equity increased due to the issue of new shares
Debt has reduced in 2023 due to repayment of some long term loan and Debentures
c) Weighted average cost of capital
Market
Instrument Value Weight Cost Wacc
Ordinary shares 1 099 900 000 0.37 15.45 5.75
Preference shares 710 000 000 0.24 12.00 2.88
Long-term loan 618 000 000 0.21 5.46 1.14
9,75% Debentures 528 689 273 0.18 9.54 1.71
2 956 589 273 1.00 11.48
Ordinary shares
Market value = Isuued shares x price per share = 42 500 000 x 2 = 1 099 900 000
6.25%X = 2 500 000
X = 2 500 .25%
X = 40 000 000.00
Number of shares = 40 000 000 + 2 500 000 = 42 500 000
Ke = 5.7 + 1.3 x 7.5 = 15.45
Preference shares
Market value = 85 200 .12 = 710 000 000
Long-term loan
FV = 600 000 000
N=3
PMT = 9% x 600 000 000 x 0.73 = 39 420 000
PV = (618 000 000)
Comp I = 5.46
9,75% Debentures
FV = 592 000 000
N = 10 - 4 = 6
PMT = 9.75% x 592 000 000 x 0.73 = 42 135 600
I = (11 - 2) x 0.73 = 9.54
Comp PV = ? = 528 689 273
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