MAC3702 TL202 S2 2014

 MAC3702 TL202 S2 2014 Essay

MAC3702/202/2/2014

Tutorial notification 202/2/2014

Using financial supervision

techniques

TERM 2

Office of Managing Accounting

INFORMATION AND FACTS:

This tutorial letter includes important information

with regards to your module.

Dear Student

Encapsulated please get the solution in respect of assignment 02/2014. It is in your own interest to see the recommended solution with the assignment as well as your own answer.

Kind regards

Contact number

Room amount

Mr In Masela

012 429 4415

1 – 37

Mrs S BГјchner

012 429 2266

1 – 57

Mrs T Klopper

012 429 8526

1 – 40

Email

[email protected] ac. za

MAC3702/202/2

SOLUTION TO GET ASSIGNMENT 02/2014 FOR THE SECOND SEMESTER

QUESTION 1

(a)

Determining benefit of company using the fair rate of return provided

YEAR

2014

2015

2016

2017

(P0)

(P1)

(P2)

(P3)

(P4)

Rand

Rand

Rand

Flanke

Rand

Predicted dividend to be paid

2014

550 500 x 1, 10

2015

605 000 x you, 15

2016

695 750 x one particular, 20

2017

834 nine hundred x you, 25

605 000

695 750

834 900

you 043 625

Gordon's dividend growth unit

2018 and onward п‚Ѓ

43 484 375

0

Fair charge

return

Net

value

605 000

695 750

834 900

forty-four 528 1000

0, 781

0, 610

0, 477

0, 373

472 505

424 408

398 247

16 608 944

of

28, 00%

present

18 904 104

0

Calculation п‚Ѓ

=

=

ke -g

back button

-

=

= R43 484 375

2

MAC3702/202/2

QUESTION one particular (continued)

The significance of 100% of Kgorong (Pty) Ltd is definitely R17 904 104

Therefore the value of 10%

sama dengan R17 904 104 times 0, 12

= R1 790 410

Alternative technique by making use of the calculator

TYPE in calculator

R0

R605 000

R695 750

R834 900

R44 528 500

I/YR

twenty eight

COMP NPV (HP10bII)

R17 883 392

The value of 100% of Kgorong (Pty) Limited is R17 883 392

Therefore the worth of 10%

= R17 883 392 x 0, 10

sama dengan R1 788 339

(b)

More reliable outcomes will be obtained when the pursuing conditions are met:

п‚·

The business venture is a going concern

п‚·

The source from the value to the shareholder is basically only the future stream of dividends

п‚·

The returns are expected to grow by a constant rate that is probably sustainable in future

п‚·

Predicted dividend expansion rate is lower than the discount rate

3

MAC3702/202/2

QUESTION 2

(a)

Calculations of NPVI in the different jobs:

Project

Expenditure

NPV

Calculation

NPVI

Project A

L 30 000

4 500

(30 000 + four 500)/30 500

1, 15

Project M

R 25 000

on the lookout for 800

(25 000 & 9 800)/25 000

one particular, 39

Project C

L 50 1000

2 600

(50 000 + 2 600)/50 500

1, 05

Conclusion

ue to the fact that the projects are indivisible we select the maximum N V's and we no longer evaluate in respect to NPVI. Indivisible projects are assignments that cannot be expanded, contracted or put together. A whole project must be carried out in its whole or not at all. The company is going to therefore initial select Job B and then Project A because these projects have the highest In V's and their initial expense is R100 000 limit.

(b)

NPV assumptions

п‚·

Investors happen to be rational

п‚·

Investors keep pace with maximise their particular wealth with regards to cash

п‚·

Capital markets are perfect

п‚·

Shareholders are risk-averse

4

which is below the

MAC3702/202/2

QUESTION a few

(a)

NPV calculation pertaining to Sam's fresh project

Year 0

12 months 1

Year 2

12 months 3

Yr 4

Yr 5

Seite

Rand

Flanke

Rand

Flanke

Rand

Information and (Calculation)

Initial purchase in automobile

Working

capital

(450 000)

(50 000)

50 500

Cash influx:

Year 1:

п‚Ѓ

12 months 2:

(R30 000 back button 1, 07)

Year three or more:

(R32 90 x one particular, 07)

Year 4:

(R34 347 by 1, 07)

Year five:

Principles of Corporate Fund: Valuing Provides Essay

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