QUESTION 1

Your client, Mr Stokes has approached you for advice as to whether he should purchase bonds in Renew Ltd who is on a major expansion drive and urgently requires additional financing for their projects. They are offering the following bond to individual investors via online applicatioDETAILns:

DETAILS RENEW LTD

Par Value R 50 0000

Price today Discount of 5%

Coupon % 14% per annum

Years 20

Interest paid Quarterly

Advise Mr Stokes whether he should purchase the bond knowing from your dealings with him that he has a required rate of return of 13,50% for his investments.

QUESTION 2

You have been provided with the following extracts from the statement of financial position of Conversion Ltd for the year ended 31 August 2019

DETAILS VALUE

NonCurrent Assets (Goodwill accounts for a quarter of this value) R 1 500 000

Mortgage Loan (Payable in full on 31 August 2021) R 650 000

Inventory R 80 000

Receivables R 95 000

Payables R 150 000

Share capital: Nominal value R 11 per share, Current price on the JSE R4 per share R 88 000

Calculate the book value per share for Conversion Ltd at 31 August 2019.