1. You have recently been appointed as the cost manager at Bolts. Bolts buys and sells a standard type of Cool Juice. The details for the year ended 31 December 2022 are as follow: 

1 January 2022 Opening inventory of 1 404 Cool Juice at R93.60 each. 

30 September 2022 Purchased 468 Cool Juice at R150 each. 

30 November 2022 Purchased 585 Cool Juice at R 144 each. During the financial year ended 31 December 2022, 600 Cool Juice were sold at R140.40 each. 

Required: 

a) Calculate the value of the closing stock using the FIFO method.

b) Calculate the gross profit using the weighted average method. 

2. ABC LTD’s ordinary shares are currently selling for R218.40 per share, with a current dividend (Do) of R12.88 per share. The firm’s dividends have been growing at an annual rate of 9.36% and this rate is expected to continue in the future. To sell new shares to raise more finance, ABC LTD’s shares will have to be offered at a discount of R4.80 per share and flotation costs are expected to amount to R6.50 per share.

 Required: 

Calculate the cost of new ordinary shares for the ABC LTD’s. Show all calculations. 

b)  The current market price of James Ltd ordinary share is R39, the expected dividend (D1) is R2.50 and the expected growth rate in dividends is 13% p.a.

c) Use the Gordon model to estimate the cost of ABC Ltd.’s ordinary shares