QUESTION $1(53$ marks$)$ You are a Financial Consultant, and the following cases currently require your attention: CASE $1$: MR$.$ HEMINGWAY Mr$.$ Hemingway wishes to purchase non$-$redeemable, non$-$cumulative converting preference shares in Scribner Ltd today. These preference shares have an issue price of R$90$ and conversion date of $30$ September $2026.$ The preference dividend rate is $8\mathrm{.}8\%$ per annum, payable quarterly in arrears $($including on the conversion date$).$ These preference shares convert at a $7\mathrm{.}5\%$ discount to the prevailing market price of ordinary shares in Scribner Ltd$.$ The expected price of the ordinary shares on the conversion date is R$64$ per ordinary share. Similar preference shares offer a return of $7\mathrm{.}2\%$ per annum. CASE $2$: MRS$.$ AUSTIN Mrs$.$ Austin is interested in acquiring ordinary shares in Egerton Ltd and requires assistance determining the current worth of each ordinary share. During the $2025-$ year a dividend of $35$ cents per share had been declared and the trading price is R$28$ per share. It is expected that the ordinary shares$$ dividend will grow at a rate of $9\mathrm{.}5\%$ per year for the next $6$ years. Thereafter, a sustainable growth rate of $4\mathrm{.}3\%$ per year is expected. Similar ordinary shares offer a yield of $6\mathrm{.}3\%$ per year. CASE $3$: ABC LTD ABC Ltd $($ABC$)$ is a retailer with outlets nationwide. The entity plans to open a new outlet in the Free State. ABC will however require funding to the value of R$1550000.$ The entity is considering issuing $11\mathrm{.}2\%$ cumulative, non$-$redeemable preference shares. Similar preference shares offer a yield of $11\mathrm{.}75\%.$ Each preference share will have a nominal value of R$10.$ During the first four years, no dividends will be paid for ABC to retain the funds for the future development of the outlet. Thereafter, ABC will pay the annual dividends on these preference shares. $3$ HFMN$230-1\_$Jan$-$Jun$2025\_$FA$2\_$V$3\_$ES$\_27012025$ CASE$4$: XYZ LTD XYZ Ltd $($XYZ$)$ is considering performing a rights issue with a subscription price of R$58$ per share in order to obtain a total funding of R$120000000.$ Currently, XYZ$$s ordinary shares are trading at R$60$ each on the JSE. XYZ has recently declared and paid a dividend to these shares in line with the entity$$s dividend payout ratio of $8\mathrm{.}8\%$ of the net profit after taxation. This dividend payout ratio is deemed to be maintained in the future. XYZ has $250000000$ ordinary shares in issue. REQUIRED: $1\mathrm{.}1.$ Refer to CASE $1$: MR$.$ HEMINGWAY. Assist Mr$.$ Hemingway by calculating the value today, of each Scribner Ltd preference share. Assume today is $30$ June $2025$ and that the preference shares are still cumdividend. $(13$ marks$)$ Communication skill: Presentation $(1$ mark$)1\mathrm{.}2.$ Refer to CASE $2$: MRS$.$ AUSTIN. Assist Mrs$.$ Austin in determining the current worth of each Egerton Ltd ordinary share. Supplement your answer by advising her whether it is worth acquiring an Egerton Ltd ordinary share at the moment. Motivate your advice. Assume today is $1$ January $2026.(20$ marks$)$ Communication skill: Logical argument $(1$ mark$)1\mathrm{.}3.$ Refer to CASE $3$: ABC LTD$.$ Calculate the current value of each preference share. $(12$ marks$)4$ HFMN$230-1\_$Jan$-$Jun$2025\_$FA$2\_$V$3\_$ES$\_270120251\mathrm{.}4.$ Refer to CASE $4$: XYZ LTD$.$ Determine the value of XYZ Ltd ordinary shares$$ expected ex$-$right price per right. $(6$ marks$)$