4.1

REQUIRED
Calculate the following from the information provided below:
4.1.1	Economic Order Quantity	(5 marks)
4.1.2	Re-order point	(3 marks)
INFORMATION
The following details have been supplied by Embury Limitedfor one of its products:
Annual sales		36 000 units
Carrying costs as a percentage of the unit purchase price		10%
Purchase price per unit		R20
Cost of placing an order		R10
Period between when an order is placedand when that order is delivered		12 days
Number of days in the year that the companyoperates		240

4.2

REQUIRED
Use the information given below to calculate the cost (as a percentage, expressed to two decimal places)to Samke Retailers of not accepting the cash discount. (Assume a 360-day year.)	(4 marks)
INFORMATION
Brics Wholesalers offersSamke Retailers creditterms of 30 days but allows a discount of 2.5% if the account is settled in full within12 days.

4.3

REQUIRED
Use the information provided below to calculate the cost (as a percentage, expressed to two decimal places)of ordinary share financing, preference share financing and the loan.	(8 marks)
INFORMATION
Gypsey Limited intendsinvesting in a project and is considering using the following three sources of finance:
Ordinary shares The marketprice of an ordinary shareof Gypsey Limitedis R20 and the total ordinary share capital is R1 000 000. The shares were initially sold for R16 each. The dividend per share at the end of the previous yearwas R3. The expected growth rate in dividends is 10%. The dividend growthmodel is used to estimate the cost of the ordinary shares.
Preference shares Gypsey Limited intendsissuing 12 000 15% preference shares at R21 per share.The cost of issuing the shares is estimated at R1 each.
Long-term loan Gypsey Limited intends obtaining a long-term loan. The loan of R1 300 000 is expected to be obtained at an interestrate of 15%. The marginal tax rate of Gypsey Limitedis 28%.