Answer ALL questions.

$(100$ MARKS$)$

QUESTION $1$

$(20$ Marks$)$

$2$

$1\mathrm{.}1$

REQUIRED

Use the information provided below to calculate the effective interest rate $($expressed to two decimal places$)$ in each of the following cases:

$1\mathrm{.}1\mathrm{.}1$ The interest is discounted.

$(3$ marks$)$

$1\mathrm{.}1\mathrm{.}2$ There is a $15\%$ compensating balance requirement.

$(3$ marks$)$

INFORMATION

Natto Limited plans to borrow R$5000000$ for one year. The stated interest rate is $16\%.$

$1\mathrm{.}2$

REQUIRED

Use the information provided below to answer the following questions:

$1\mathrm{.}2\mathrm{.}1$ Calculate the current ratio and return on net assets of both companies $($expressed to two decimal places$).$

$(8$ marks$)$

$1\mathrm{.}2\mathrm{.}2$ Comment on the working capital, profitability and risk of both companies.

$(6$ marks$)$

INFORMATION

The following information was obtained from the financial statements of Company D and Company E$,$ which are similar companies:

$\backslash$table$[[,$Company D$,$Company E$],[,$R$,$R$],[$Sales$,2000000,2000000],[$Operating profit,$300000,300000],[$Non$-$current assets,$1600000,1600000],[$Inventories$,80000,836000],[$Accounts receivable,$60000,680000],[$Cash$,10000,84000],[$Non$-$current liabilities,$800000,800000],[$Accounts payable,$120000,370000],[$Expenses payable,$5000,40000]]$