Exam (elaborations)
MAC2602 Assignment 6 semester 2 2024
- Institution
- University Of South Africa (Unisa)
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6/7/23, 7:11 PM Assessment 6: Attempt reviewMENU
Dashboard / Courses / UNISA / 2023 / Semester 1 / MAC2602-23-S1 / Welcome Message / Assessment 6
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.]
(a) R11 158 705
(b) R90 909 091
(c) R6 928 167
(d) R95 769 462
Select one:
a. R95 769 462
b. R11 158 705
c. R6 928 167
d. R90 909 091
https://mymodules.dtls.unisa.ac.za/mod/quiz/review.php?attempt=11195470&cmid=734142 1/17
,6/7/23, 8:27 PM Assessment 6: Attempt review
Question 2
Correct
Mark 3.00 out of 3.00
MENU
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
(b) R13 218
(c) R54 079
(d) R26 638
Select one:
a. R26 638
b. R54 079
c. R17 674
d. R13 218
https://mymodules.dtls.unisa.ac.za/mod/quiz/review.php?attempt=11195470&cmid=734142 2/17
,6/7/23, 8:27 PM Assessment 6: Attempt review
Question 3
Correct
Mark 3.00 out of 3.00
MENU
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
(b) R30 000 000
(c) R90 909 091
(d) R300 000 000
Select one:
a. R90 909 091
b. R30 000 000
c. R300 000 000
d. R3 448 295
https://mymodules.dtls.unisa.ac.za/mod/quiz/review.php?attempt=11195470&cmid=734142 3/17
, 6/7/23, 8:27 PM Assessment 6: Attempt review
Question 4
Correct
Mark 3.00 out of 3.00
MENU
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].
(a) 0,3898
(b) 0,4561
(c) 0,4100
(d) 0,3700
Select one:
a. 0,3700
b. 0,4561
c. 0,4100
d. 0,3898
https://mymodules.dtls.unisa.ac.za/mod/quiz/review.php?attempt=11195470&cmid=734142 4/17
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