QUESTION 3 (continued) iv. The current return on RSA186 long-term government bonds is 9.45%. The market...

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QUESTION 3 (continued) iv. The current return on RSA186 long-term government bonds is 9.45%. The market risk premium for the South African equity market is 7%. The average beta coefficient of company's similar to Molelo that are listed on the JSE is 1.2, Molelo is expected to be more volatile as it will be a new entrant on the JSE, the company Beta is expected to be 10% more volatile than the market. V. The prime lending rate in South Africa is currently 11.25% vi. Income taxation is payable at a rate of 27%. REQUIRED: (a) Calculate the value of Molelo Ltd at the end of 2023 using a Net Assets valuation method. (12) (b) Calculate and determine which finance instrument will be more cost effective for Molelo Ltd to finance the expansion. (12) (Note: Please present your answer rounded in R'000) (c) Discuss factors that Molelo Ltd must consider in deciding on which finance instrument to use. (9) Total for Question 3 (33) QUESTION 3 (continued) iv. The current return on RSA186 long-term government bonds is 9.45%. The market risk premium for the South African equity market is 7%. The average beta coefficient of company's similar to Molelo that are listed on the JSE is 1.2, Molelo is expected to be more volatile as it will be a new entrant on the JSE, the company Beta is expected to be 10% more volatile than the market. V. The prime lending rate in South Africa is currently 11.25% vi. Income taxation is payable at a rate of 27%. REQUIRED: (a) Calculate the value of Molelo Ltd at the end of 2023 using a Net Assets valuation method. (12) (b) Calculate and determine which finance instrument will be more cost effective for Molelo Ltd to finance the expansion. (12) (Note: Please present your answer rounded in R'000) (c) Discuss factors that Molelo Ltd must consider in deciding on which finance instrument to use. (9) Total for Question 3 (33)