MAC3702 Assignment 2 2026 | Due 22 April 2026 - Distinction Guaranteed

MAC3702 Assignment 2 2026 | Due 22 April 2026 - Distinction Guaranteed. Ensure your success with us! W.h.a.t.s.A.p.p : 0.7.8.6.9.2.4.2.6.4. QUESTION 1 (69 marks) UrbanKick Sports Limited (“UKS”) is a Johannesburg-based sportswear manufacturer and distributor specialising in football apparel and footwear. The company is listed on the Johannesburg Stock Exchange (JSE) and operates several branded retail outlets across South Africa and selected SADC countries. Due to increased investment in South African football by technology firms, streaming platforms and mobile network operators, UKS has identified growth opportunities in the performance footwear market. The upcoming FIFA world cup, many South African football clubs that will be participating in the African Cup tournaments and growing popularity of women’s football also contribute to the growth opportunities. The UKS board has overwhelmingly approved the launch of a new smart-performance soccer boot called NOVA X9, inspired by local football icon Neo Khumalo. The following information was extracted from the integrated annual report of UKS. Extract from Statement of Financial Position at 31 December 2025 Rand Ordinary shares (80 cents each) 500 000 Retained income 720 000 Shareholders' capital and reserves % Preference shares (R100 each) 120 000 Long term loan - Hatsa Bank (13%) 680 000 Total equity and liabilities Additional information 1. The expected operating profit, excluding profits from the sale of Nova X9 soccer boots, for the year ending 31 December 2025 is as follows: R Probability % % % % 2. Ordinary share dividends declared and paid in the previous five (5) years were as follows: Year Dividend per share 2021 78 cents 2022 85 cents 2023 94 cents 2024 100 cents 2025 110 cents The UKS Board intend s to maintain the average annual growth in dividends. REQUIRED (a) Calculate the expected operating profit for the year ending 31 December 2025 including the expected operating profit from the new Nova X9. [Round off to the nearest Rand] (10) (b) Determine how the acquisition of the new manufacturing machine should be financed, considering the funding options available to UKS as well as the current capital structure on 31 December 2025 using book values. In your comments, discuss what factors the company should also consider regarding cheaper funding options and control. (Calculations 9 marks; comments 3 marks) (12) (c) Calculate the weighted average cost of capital of UKS based on book values after the financing of the new project. [Round off amounts to the nearest Rand and other numbers to the nearest two decimal places] (10) (d) Based on net present value (NPV) principles, advise UKS if they should go through buying the new machine. You must show all your detailed calculations. [Round off answers to the nearest rand] (21) (e) Determine how long (in years) it will take UKS to recover its initial capital investment in the new machine, using the discounted payback method. Use the answers from question (d). (5) (f) List five (5) qualitative factors that should be considered by the Board of UKS before deciding to buy the new machine. (5) (g) For this question use the following additional information to the scenario given above: UrbanKick Sports Limited (UKS) is considering expanding its Nova X9 product line into international markets to exploit the upcoming FIFA World Cup 2026 and CAF Africa Cup of Nations 2027. However, management is concerned about rising production costs, volatile exchange rates and increasing competition