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Hi please assist. Variable manufacturing cost per unit R26 Selling price per unit R100 Marketing costs Advertising R16 000 per month Sales personnel's salaries and
Hi please assist.
Variable manufacturing cost per unit R26 Selling price per unit R100 Marketing costs Advertising R16 000 per month Sales personnel's salaries and commission R20 000 per month plus 6% sales Administration costs: Salaries R48 000 per month Other office costs R16 000 per month plus R8 unit sold The number of units expected to be produced and sold during 2024 is 30000 (25marks) Answer each of the following questions independently. 3.1 Calculate the total contribution margin and operating profit (loss) if all 30000 units are sold. (5 marks) 3.2 Calculate the margin of safety (as a percentage) for 2024 (6 marks) 3.3 Use the contribution margin ratio to calculate the sales value required to achieve an operating profit of R1 200000=(7marks) 3.4 Suppose Jimmy Enterprises is considering a R6 per unit decrease in the selling price of the product with the expectation that this would increase the sales volume by 10%. Is this a good idea? Motivate your answer with the relevant calculations (7marks) The equipment costs R1 000000 for each project and no scrap value is expected. The required rate of return is 12%. NOTE: Where present value tables are required, use tables with 4 decimal places. REQUIRED 1.1 Calculate the Payback Period of Brik and Brak Equipment. (Answer must be expressed in years, months and days.) ( 8 marks) 1.2 Calculate the Accounting Rate of return (on average investment) of Brak Equipment (answer expressed to two decimal places). ( 6 marks) 1.3 Calculate the Net Present Value of Brik Equipment. (Round off amounts to the nearest Rand.) (5 marks) 1.4 Calculate the Internal Rate of Return of Brak Equipment (answer expressed to two decimal places). (6 marks) Question 2 (25 marks) You have been appointed as a financial consultant by the directors of Emalusi, They require you to determine the cost of capital of the company. The following information is available on the capital structure of the company: 1500000 ordinary shares, with a market price of R3 per share. The latest dividend declared was 86 cents per share. A dividend growth of 15% was maintained for the past 5 years. 1000000 11\%, R1 preference shares, with a market value of R3 per share. R1 0000009%, debentures due in 7 years and the current yield-to-maturity is 10%. Note that the current price of the debenture is R951 356 R700 000 14\%, bank loan, due in December 2021. Additional information: - The company has a tax rate of 30%. - The beta of the company is 1.7 , a rick free rate of 5% and the return on the market is 14%. Required: 2.1 Calculate the weighted average cost of capital. Use the Gordon Growth Model to calculate the cost of equity (22 marks) 2.2 Calculate the cost of equity, using the Capital Asset Pricing Model. ( 3 marks)Step by Step Solution
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