MAC2602 Assignment 3 semester 2 2023

MAC2602 ASSIGNMENT 3
SEMESTER 2 2023
WRITTEN BY EXPERT
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QUESTION 01

1.1 b

1.2 d

1.3 b

1.4 A

1.5 C

1.6 C

, MAC3761/QB002


5.9. SOLUTION 09: KINGSTON LIMITED

a) Calculate cost of debt (loan)

Loan = (10,5% + 2%) x 0,72 = 9%



b) Calculate cost of debt (debentures)

Debentures = 10% x 0,72 = 7,2%



c) Calculate cost of equity




= +g


= + 0,12

= 16,48%



Using Capital Asset Pricing Model


= Rf + ß (Rm Rf)


= Rf + ß (Rp)

= 7% + 1,2 * (7,9%)

= 16,48%



d) Calculate market value of loan (Vd1)


Key Variables Value

FV R10 000 000 -10 000 000
N 3 years 3
i (10,5% + 2%) x 0,72 9
PMT R10 000 000 x (10,5% - 1%) x 0,72 -684 000
Comp PV Calculation 9 453 240




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