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1. 0,80,5
2. 4,78,25
3. 8,76,45
4. 12,74,65
5. 16,72,85
Assuming that the demand function for Good X is Qd=80-P/2 and the supply function for Good X is Qs=5+5P with a given prices. Make a demand and supply schedule to find the market equilibrium.
For Demand Schedule of Price:
a. 0
b. 4
c. 8
d. 12
e. 16
For Good X:
a. ?
b. ?
c. ?
d. ?
e. ?
Gor Supply Schedule of Good X:
a. ?
b. ?
c. ?
d. ?
e. ?
Describe the functions of money in a South African economy
'When managing an economy, a government needs to use a combination of monetary and fiscal policy, as each policy has benefits and limitations'. Evaluate this statement with reference to South African examples.
Distinguish among the different types of money that can be used in the South African economy
Describe those characteristic/properties that make money useful in an economy like South Africa
Discuss why people would like to hold money
Explain the demand for money in an economy like South Africa
Company C is a large firm listed on the LuSE. It has the following capital structure:
K mil
Debt – 5 yrs; 8% 25
Preferred Stock – 5% coupon, K100 par 15
Common Equity – K100 par 10
Retained Earnings 23
The current dividend for the company is K 50/share and is expected to grow at 3% per year in the foreseeable future. The equity shares trade at K 450/share. The preferred shares trade at K104/share. The debt currently trades at K 900 per K1,000 nominal value bond.
Required:
Calculate the firm’s WACC.
(a) Company A is funded as follows:
Balance Sheet Extract
Ordinary Shares (50n) K 2000
12% Loan Notes 1500
8% Preference Shares (K1) 500
Details on these are as follows:
The company has an equity beta of 1.2. Government bonds are currently trading at 6% and the average market risk premium is 7%.
The Loan notes are currently trading at K106 per K100 note (and assume that the before tax cost of debt is now 10%).
The preference shares are trading at K0.92.
The current share price is K1.25.
The tax rate is 30%.
Calculate the Weighted Average Cost of Capital
(b) Company B currently has 5 million preferred shares outstanding. The shares have a par value of K22.50 per share and their current price is K25 per share. B’s tax rate is 40% and flotation costs on a new issue of preferred shares are 5%.
What per-share dividend are the preferred shares paying if the component cost of the preferred shares in a weighted average cost of capital calculation is 8.25%?
