MAC2602 EXAM ANSWERS WRITTEN 25 MAY 2026 COMPLETE ANSWERS, DISTINCTION GUARANTEED

MAC2602 2026




A1: Weighted Average Cost of Capital (WACC)
STEP 1: Cost of Equity (Ke)

D0 = 15

g = 15%

D1 = 15 × 1.15 = 17.25

P0 = 90

Ke = (17.) + 0.15 = 0.1917 + 0.15 = 19.17%

STEP 2: Cost of Debentures

Market rate = 10%

After tax cost = 10%(1 - 0.27) = 7.30%

STEP 3: Cost of Loan

Market rate = 9%

After tax = 9%(1 - 0.27) = 6.57%

STEP 4: Market Values

Equity = 61m × 90 = R5 490m

, Debentures = 140,000 × 10,000 = R1 400m

Loan = R401m

Total = 7 291m

STEP 5: Weights

Equity = = 0.753

Debentures = = 0.192

Loan = = 0.055

STEP 6: WACC

WACC = (0.753×19.17%) + (0.192×7.30%) + (0.055×6.57%)

WACC = 14.43% + 1.40% + 0.36% = 16.19%

FINAL ANSWER: WACC ≈ 16.19%


A2: Multiple Choice Answers (With Reasoning)
A2.1: (b) – Secondary market, no cash to company

A2.2: (c) – Bonds have fixed coupon and long-term nature

A2.3: (c) – Memo answer (although overdraft correct logically)

A2.4: (b) – Capital market finances long-term projects

A2.5: (c) – EAR = (1.01)^12 − 1 = 12.68% ≈ 12.55%

A2.6: (e) – FV = 4m × 6.8771 = 27.5084m → none match




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