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The group should note that this question provides an opportunity to practice the type of questions that may be included in the summative assessment. Therefore, each member of the group should attempt the calculations individually and show proof to the other group members. The individual contributions will then be the basis on which the group can come to an agreement on the answers to be submitted. The task should NOT be assigned to one or some group member(s) to complete on behalf of the rest. 2.1 Study the financial statements below and complete the question that follows: Morphet Ltd Statement of comprehensive income of Morphet Ltd for the year ended 31 December 2020 Net sales Less: Cost of sales Gross profit Less: Operating costs Depreciation Operating profit Less: Interest on mortgage bond Profit before tax Less: Income tax Net profit after tax Less: Preference dividends Profit attributable to ordinary shareholders Less: Ordinary shareholders' dividends Retained profits Fixed assets Land and buildings R 000 Statement of financial position of Morphet Ltd as at 31 December 2020 R² 000 5 670 720 150 6970 Shareholders' capital Ordinary issued shares R' 000 R' 000 8 600 3.500 5 100 570 4 530 57 4473 930 3543 790 2753 550 2 203 Plant and equipment Less: Depreciation Current Assets Cash Debtors Inventory 1 150 150 1785 1540 980 Capital Components: 4 305 Calculate the following ratios: a. Acid test ratio b. Debt ratio c. Return on shareholders' interest Owners' Equity: 11 275 (550 000 @ R4.60) Retained earnings Owners' equity Preference share capital Shareholders interest Long-term Liability Mortgage bond Current Liabilities Trade creditors Bank overdraft Arrear expenses 2 350 Cost of Capital 2140 400 352 11.2% 2 530 2.203 4 733 1.300 6 033 2 350 2.2 On 1 January 2019, Thabo deposited R8 485 into a fixed deposit account at 9.5% for 2 years. At maturity, he withdrew R1 450 cash and reinvested the balance of the amount in another account offering interest of 9.75% p.a. How much will he have on 31 December 2022? (5 Marks) 2 892 11 275 2.3 Siyabonga Incorporated wants to determine the cost of the components in their capital structure. Use the information in the table below to calculate the company's Weighted Average Cost of Capital (WACC). (7 Marks) Source: Chilima, K. (2021) 1 540 000 (2 Marks) (2 Marks) (2 Marks) [Sub Total 6 Marks] Total Capital R Preference Share Capital: Long-term Debt [After Tax]: 11.25% 8.5% a. b. 380 000 1 404 000 2.4 Excel Ltd manufactures office desks at their factory. The fixed cost is R280 450 and their variable cost is R130 per desk. The desks are sold at R450 each. a. How many desks must be produced to break even? b. How many desks must be produced to make a profit? C. How many desks must be produced to make a profit of R340 000? (2 Marks) (1 Mark) (2 Marks) [Sub Total 5 Marks] 2.5 The management of Excel Limited is considering the purchase of new equipment to improve the rate of production in their factory. Income from the new equipment is projected to be R240 000 in the first year, R380 000 in the second year and R535 000 after three years. The initial investment is R640 000. They are evaluating the financial viability of this project and require your advice. The discount rate is 11.5%. Calculate the Net Present Value of the project. (6 Marks) (1 Mark) [Sub Total 7 Marks] Advise the organisation whether it should proceed with the project or not. The group should note that this question provides an opportunity to practice the type of questions that may be included in the summative assessment. Therefore, each member of the group should attempt the calculations individually and show proof to the other group members. The individual contributions will then be the basis on which the group can come to an agreement on the answers to be submitted. The task should NOT be assigned to one or some group member(s) to complete on behalf of the rest. 2.1 Study the financial statements below and complete the question that follows: Morphet Ltd Statement of comprehensive income of Morphet Ltd for the year ended 31 December 2020 Net sales Less: Cost of sales Gross profit Less: Operating costs Depreciation Operating profit Less: Interest on mortgage bond Profit before tax Less: Income tax Net profit after tax Less: Preference dividends Profit attributable to ordinary shareholders Less: Ordinary shareholders' dividends Retained profits Fixed assets Land and buildings R 000 Statement of financial position of Morphet Ltd as at 31 December 2020 R² 000 5 670 720 150 6970 Shareholders' capital Ordinary issued shares R' 000 R' 000 8 600 3.500 5 100 570 4 530 57 4473 930 3543 790 2753 550 2 203 Plant and equipment Less: Depreciation Current Assets Cash Debtors Inventory 1 150 150 1785 1540 980 Capital Components: 4 305 Calculate the following ratios: a. Acid test ratio b. Debt ratio c. Return on shareholders' interest Owners' Equity: 11 275 (550 000 @ R4.60) Retained earnings Owners' equity Preference share capital Shareholders interest Long-term Liability Mortgage bond Current Liabilities Trade creditors Bank overdraft Arrear expenses 2 350 Cost of Capital 2140 400 352 11.2% 2 530 2.203 4 733 1.300 6 033 2 350 2.2 On 1 January 2019, Thabo deposited R8 485 into a fixed deposit account at 9.5% for 2 years. At maturity, he withdrew R1 450 cash and reinvested the balance of the amount in another account offering interest of 9.75% p.a. How much will he have on 31 December 2022? (5 Marks) 2 892 11 275 2.3 Siyabonga Incorporated wants to determine the cost of the components in their capital structure. Use the information in the table below to calculate the company's Weighted Average Cost of Capital (WACC). (7 Marks) Source: Chilima, K. (2021) 1 540 000 (2 Marks) (2 Marks) (2 Marks) [Sub Total 6 Marks] Total Capital R Preference Share Capital: Long-term Debt [After Tax]: 11.25% 8.5% a. b. 380 000 1 404 000 2.4 Excel Ltd manufactures office desks at their factory. The fixed cost is R280 450 and their variable cost is R130 per desk. The desks are sold at R450 each. a. How many desks must be produced to break even? b. How many desks must be produced to make a profit? C. How many desks must be produced to make a profit of R340 000? (2 Marks) (1 Mark) (2 Marks) [Sub Total 5 Marks] 2.5 The management of Excel Limited is considering the purchase of new equipment to improve the rate of production in their factory. Income from the new equipment is projected to be R240 000 in the first year, R380 000 in the second year and R535 000 after three years. The initial investment is R640 000. They are evaluating the financial viability of this project and require your advice. The discount rate is 11.5%. Calculate the Net Present Value of the project. (6 Marks) (1 Mark) [Sub Total 7 Marks] Advise the organisation whether it should proceed with the project or not.
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Answer 21 a Acid test Ratio b c Rerwy 202 Current Asset... View the full answer
Related Book For
Accounting Principles
ISBN: 978-1118875056
12th edition
Authors: Jerry Weygandt, Paul Kimmel, Donald Kieso
Posted Date:
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