THIS DOCUMENT HAS BEEN CAREFULLY PREPARED BY YOUR TOP TUTORS. IT PROVIDES GUIDANCE ON EXPECTED QUESTIONS AND POSSIBLE ANSWERS TO FIN2603 ASSESSMENT 2 OF SEM 2 2023. USING IT CORRECTLY AS A GUIDE WILL HELP YOU SCORE ABOVE 80%
Started on Tuesday, 12 September 2023, 7:00 AM
State Finished
Completed on Tuesday, 12 September 2023, 7:57 AM
Time taken 56 mins 51 secs
Question 1 What amount must be invested annually (at the beginning of each year) for 5 successive years
Complete at 8% p.a. compounded interest in order to yield R500 000?
M arked out of
1.00 a. R89 383.21
b. R92 000.44
c. R78 915.03
d. R82 047.05
Question 2 The financial manager is evaluating a proposal for a new project with the following cash flows:
Complete Year Net cash flows 0 -R 1 000 000 1 R 550 000 2 R 350 000 3 R 90 000The payback
period is ...
M arked out of
1.00
a. two years.
b. between one and two years.
c. three years.
d. more than three years.
Question 3 Mr Hamilton has arranged for a 90-day loan at an annual rate of interest of 8%. If the loan
Complete amount is R1000 000, how much interest in rand terms will Megatron pay? (Assume a 365-day
year)
M arked out of
1.00
a. R0
b. R19 726.03
c. R80 000.00
d. R20 000.00
, Question 4 A company has financed 45% of its assets through a 11% after-tax cost of debt loan. The
Complete remainder of its assets are financed through equity. The firm’s required return on equity is 16%.
Calculate the company's weighted average cost of capital (WACC)?
M arked out of
1.00
a. 11.25%
b. 43.56%
c. 28.50%
d. 13.75%
Question 5 Calculate the EOQ based on the following information: 21 000 units used annually, purchased at
Complete R65 per unit. Order cost is R340 per order. Carrying cost is 9% of inventory value.
M arked out of
1.00 a. 1 599 units
b. 1 614 units
c. 1 562 units
d. 1 633 units
Question 6 A firm with a cash conversion cycle of 40 days can stretch its average payment period from 15
Complete days to 20 days. This will result in a/an ...
M arked out of
1.00 a. increase of 20 days in the cash conversion cycle.
b. decrease of 5 days in the cash conversion cycle.
c. decrease of 20 days in the cash conversion cycle.
d. increase of 5 days in the cash conversion cycle.
Question 7 The before-tax cost of debt for a firm which has a 35% marginal tax rate is correctly calculated
Complete at 12%. Calculate the after-tax cost of debt.
M arked out of
1.00 a. 9.6%
b. 8.4%
c. 7.8%
d. 12.0%
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