Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please answer the following question in depth. QUESTION 5 Answer the questions from the information provided (4 marks) 5.1 Use the Gordon growth model to

please answer the following question in depth.
image text in transcribed
image text in transcribed
QUESTION 5 Answer the questions from the information provided (4 marks) 5.1 Use the Gordon growth model to estimate the cost of the ordinary shares of AMN Limited from the information provided below INFORMATION The present value of an AMN Limited ordinary share is R60, the expected dividend at the end of Year 1 is R5 and the expected growth rate in dividends is 11% pa (5 marks) 5.2 Use the information provided below to calculate the weighted average cost of capital of PWV Limited. INFORMATION The optimal capital share for PW Limited is 40% debt, 10% preference share and 50% ordinary share financing The pre-tax costs of capital for debt, preference shares and ordinary shares are 20%, 12.5% and 18.5% respectively. The tax rate is 30% 5.3 Prepare an extract of the Statement of Comprehensive Income that would reflect, amongst others, the value of closing inventory and gross profit for the year ended 31 December 2020 using the following methods of inventory valuation First-in-first-out 5.3.1 (5 marks) 5.3.2 (4 marks) Weighted average cost INFORMATION Saha Sportshop had the following inventory of Cricket bats on 01 January 2020, the start of the financial year. Quantity Unit purchase price Carriage on purchases per unit R250 R10 30 bats During 2020 the following purchases, returns and sales were made: 270 bats were purchased at R270 each on 31 March 2020. Carriage amounted to R10 per unit. 100 bats that were purchased on 31 March 2020 were returned to the supplier. No refund could be obtained on the carriage INFORMATION Saha Sportshop had the following inventory of cricket bats on 01 January 2020, the start of the financial year. Quantity Unit purchase price Carriage on purchases per unit R250 R10 30 bats During 2020 the following purchases, returns and sales were made: 270 bats were purchased at R270 each on 31 March 2020. Carriage amounted to R10 per unit 100 bats that were purchased on 31 March 2020 were returned to the supplier. No refund could be obtained on the carriage 300 bats were purchased at R280 each on 31 August 2020. Carriage amounted to R15 per unit. 400 bats were sold during the year at R500 each. Note: The carriage costs are not included in the purchase prices stated above. 5.4 Determine the inventory period of MS Manufacturers from the information provided below. (2 marks) INFORMATION The debtors collection period of MS Manufacturers is 45 days. The creditors payment period is 30 days. The cash conversion cycle is 73 days

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamental Accounting Principles

Authors: Larson Kermit, Tilly Jensen

Volume I, 14th Canadian Edition

71051503, 978-1259066511, 1259066517, 978-0071051507

Students also viewed these Accounting questions