HIGHER EDUCATION PROGRAMMES

SA1 ANSWERBOOKLET

HFMN330-1

Name Simphiwe

Surname Mazibuko

Student Number1004390

Support Centre Alberton

Module Name HFMN330-1

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Question 1 (28 Marks)

1 347 424 + 839 301 = 2 186 725

2 186 725 / 91 429 848 × 100/1

= 2.39%

1 347 424 / 89 243 123 × 100/1

= 1.509 or 1.51%

Times interest earned ratio = EBIT/INTEREST

25 351 209/144 668= 175.237 times

Earnings per Share =

18 148 710/80 600 000 = 0,225 cents

Dividend per share =

5 444 613/ 80 600 000 =0.0675 cents

Price Earnings (P/E) =

4 732/0,225=21031.11 cents

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 Earnings yield =
0.225/47325×100/1

=4.7548%

Dividend yield =
0.0675/4732 × 100/1
=1.42645%

Question 2 [16 Marks]

2.1 (12 marks)

FNB
0.158 365
𝑖𝑒𝑓𝑓 (1 + ) − 1 = 0.1758 × 100 = 17.58%
365
Standard Bank
0.158 2
𝑖𝑒𝑓𝑓 (1 + ) − 1 = 0.1653 × 100 = 16,53%
2

Standard Bank loan because it has the lowest effective cost of financing.

2.2 (4 marks)
1,000 +2,140+3,440 + 4,921 + 6,610 = 18,111 × 130 000 = 2 354 430

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Question 3 [10 Marks]

3.1 (8 marks)
Project Beta Net Cash Flow Factor Present value

1 1 872 000 0.870 1 628 640

2 1 460 160 1.626 2 374 220,16

3 1 198 080 2.283 2 735 216.64

4 1 085 760 2.854

3 098 759.04
5 767b520 3.352 2 572 727.04

Present value Net 124 095 562.88

Cash Flows
(4 680 000)

Net present value 7 729 562.88

3.2 Advise your supervisor whether he should accept this new project or not and why.

The supervisor should accept the project as the NPV exceeds 0, which shows goods
prospects (2 marks)

Question 4 (16 Marks)

4.1
𝐾𝑆 = 𝑅𝑓 + 𝛽(𝐾𝑚 − 𝑅𝑓 )
= 0,08 + 1,75(0,12 − 0,08)
=0,15

(5 marks)
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4.2 (11 marks)
Sources of finance Pre-tax cost After tax cost Weight Weighted cost
Ordinary share 25% 18% 0.50 9%
capital
Retained earnings 25% 18% 0.25 4.5%
Preference share 10% 7% 0.10 0.7%
capital
Long term Debt 13% 9.36% 0.15 1.40%
WACC 15.6%
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