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Fin3701 Assignment 2 Semester 1 2024 (505104) MEMO

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Fin3701 Assignment 2 Semester 1 2024 (505104) MEMO. This document contains everything you need to excel in your Fin3701 Assignment 2 Semester 1 for 2024. This document contains questions, suggested solutions and detailed explanations for FIN3701 Assignment 2 (505104)Semester 1 Compiled usi...

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  • April 15, 2024
  • 10
  • 2023/2024
  • Exam (elaborations)
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FIN3701
ASSIGNMENT 2
2024
This document contains
questions, suggested solutions
and detailed expanations for
FIN3701 Assignment 2 (505104)
Semester 1




Compiled using :
SEARCHABLE Principles of Managerial Finance: Global and
Southern African Perspective. 2021. 2nd
edition:Gitman, LJ, Beaumont-Smith, M,
Hall, J, Marx, J, Strydom, B & Van der Merwe,
UPDATED A.




QUESTIONS & MEMO ANSWERS INCLUDED

, SOLUTIONS TO ASSIGNMENT 02

QUESTION 1 [10 marks]
QUESTION 1.1 (8 marks)

Calculator:

PV -3.14
FV 3.95
N 3
I/YR (growth rate) 8%

D2021 =D1 = D0 (1 + g) = 3.95 (1.08) = 4.27

D2022 =D1 = D0 (1 + g) = 4.27 (1.10) = 4.70

D2023 =D1 = D0 (1 + g) = 4.70 (1.10) = 5.17

Ks = 15% (given)

G = 10% (given)

P2021 = D1
(ks-g)
= 5.17 / (15%-10%)
= R103



QUESTION 1.2 (2 marks)

Bonga should not purchase the shares because the share price is higher than R52.

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