$20 Bonus + 25% OFF
$20 Bonus + 25% OFF
Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!
Add File

Error goes here

Files Missing!

Please upload all relevant files for quick & complete assistance.

AC3059 Financial Management

tag 0 Download3 Pages / 629 Words
  • Course Code: AC3059
  • University: University Of London

    MyAssignmentHelp.com is not sponsored or endorsed by this college or university

  • Country: United Kingdom


Question 1

Zaha Ltd has an equity beta of 1.10. The market risk premium in South Africa is expected to be 5% and the yield on government bonds is currently 7.5%. Zaha has issued bonds and its R100 par-value bond is currently trading at R94.50. The coupon rate is 8%. The maturity date is in 5 years’ time and the corporate tax rate is 29%. Interest is payable annually in arrears. The company has just paid the coupon interest for the current year.


  • What is Zaha’s cost of equity, based on CAPM?
  • What is the after-tax cost of debt?
  • Zaha paid a dividend of R0.12 per share and the dividend per share is expected to grow at 7% indefinitely. The company’s share price is R2.30. What is the company’s cost of equity if we use the dividend growth model?
  • What is the weighted-average cost of capital (WACC) if the target debt-equity ratio is 50%? (Use cost of equity as per CAPM)

Question 2

Afroflights wishes to make a takeover bid for Mayfly. Mayfly makes after-tax profits of R40 000 per year. Afroflights believes that if further money is spent on additional investments, the after-tax cash flows (ignoring the purchase consideration) could be as follows.


Cash flow (net of tax)



(100 000)


(80 000)


60 000


100 000


150 000


150 000

The after-tax cost of capital of Afroflights is 15% and the company expects all the investments to payback, in discounted terms, within five years.

  • What is the maximum price that the company should be willing to pay for the shares of Mayfly?
  • What is the maximum price that the company should be willing to pay for the shares of Mayfly if it decides to value the business on the basis of cash flows in perpetuity, and annual cash flows from year 6 onwards are expected to be R120 000 with a sustainable growth rate of 6% per year?

Question 3

Amandla Pty is considering an investment in new technology that will reduce operating costs through increasing energy efficiency and decreasing pollution. The new technology will cost R1 million and have a four year life, at the end of which it will have a scrap value of R100 000.

A licence fee of R104 000 is payable at the end of the first year. This licence fee will increase by 4% per year in each subsequent year.

The new technology is expected to reduce operating costs by R5.80 per unit in current price terms.

Forecast production volumes over the life of the new technology are expected to be as follows:






Production (units per year)

60 000

75 000

95 000

80 000


If Amandla bought the new technology, it would finance the purchase through a four-year loan paying interest at an annual before-tax rate of 8.6% per year. The loan repayment schedule is as shown in the table below:

Alternatively, Amandla could lease the new technology. The company would pay four annual lease rentals of R380 000 per year, payable in advance at the start of each year. The annual lease rentals include the cost of the licence fee.

If Amandla buys the new technology it can claim tax allowance depreciation on the investment on a 25% reducing balance basis. The company pays taxation one year in arrears at an annual rate of 30%. Amandla has an after-tax weighted average cost of capital of 11% per year.


  • Calculate and determine whether Amandla should lease or buy (using the loan facility) the new technology. (Round the discount rate and cash flows to zero decimal places)
  • Using a nominal terms approach, calculate the net present value of buying (paying the full cost immediately) the new technology and advise whether Amandla should undertake the proposed investment.
Download Sample Now

Earn back the money you have spent on the downloaded sample by uploading a unique assignment/study material/research material you have. After we assess the authenticity of the uploaded content, you will get 100% money back in your wallet within 7 days.

Unique Document

Under Evaluation

Get Money
into Your Wallet

Total 3 pages

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help (2021) Financial Management [Online]. Available from: https://myassignmenthelp.com/free-samples/ac3059-financial-management/market-and-average-accounting-cost-of-capital-management.html
[Accessed 06 December 2021].

My Assignment Help. 'Financial Management' (My Assignment Help, 2021) <https://myassignmenthelp.com/free-samples/ac3059-financial-management/market-and-average-accounting-cost-of-capital-management.html> accessed 06 December 2021.

My Assignment Help. Financial Management [Internet]. My Assignment Help. 2021 [cited 06 December 2021]. Available from: https://myassignmenthelp.com/free-samples/ac3059-financial-management/market-and-average-accounting-cost-of-capital-management.html.

Curating the most effective thesis paper is a tedious task. It requires dedicated effort and time. You need to have knowledge on the subject matter, accurate formatting style and citation of resources. Moreover, you need to know the trick of acquiring the validations without wasting much time. Experts at MyAssignmenthelp.com will not only show you how to write a thesis statement but will hand you the most compelling content. If you have no idea how to write a research paper, checking out thesis examples won’t help you much. In such cases, PhD experts’ assistance will provide you with the much-needed marks.

Latest Marketing Samples

HK2011 Buyer Beahviour

Download : 0 | Pages : 12
  • Course Code: HK2011
  • University: Holmes Institute

    MyAssignmentHelp.com is not sponsored or endorsed by this college or university

  • Country: Australia

Answer: Introduction The following assignment is about defining the consumer buying processes or determining the consumer buyer behaviors. In this assignment, there are two parts. The organization that has been selected for this assignment is the Holmes University that is situated in Australia. It is one of the most renowned business colleges in the world. The university began its journey in the year 1963 when they opened their business comme...

Read More arrow Tags: Australia Brisbane Management Mechanical Ventilation(critical care nursing) James Cook University Masters in Business Administration 

MKTG307 Consumer Behavior

Download : 0 | Pages : 5

Answers: Answer 1. Art and science have co-existed and has enlightened human beings from time immemorial. In history Renaissance period is one of the grounds breaking time for humanity where the culmination of both these subjects meet. The result of this period’s art and science are exemplary inventions, ideation, analysis, understanding and many more. Marketing is the process by which an aspect is portrayed and showcased along with fee...

Read More arrow Tags: Australia Old Westbury Management Consumer Business Behaviour University of Queensland MBA 

MKTG3002 Digital And Social Media Marketing

Download : 0 | Pages : 5

Answers: Answer to Question 1 The objective of this kind of activity is reducing the instances of sunburn in the persons who get the tan while travelling to a foreign country. The objective of the intervention is to reduce the tan level of the tourists, thereby promoting their optimum health. This is also the objective of the tourism company who strives to promote healthy tourism among their customers. Answer to Question 2 The interventions...

Read More arrow

MKT501 Marketing Management

Download : 0 | Pages : 15
  • Course Code: MKT501
  • University: Charles Sturt University

    MyAssignmentHelp.com is not sponsored or endorsed by this college or university

  • Country: Australia

Answer: Introduction In the growing competitiveness of the businesses in Australia, it is essential for an organization to design and implement effective marketing strategies in order to ensure the smooth running of the business operations despite of lots of market risks, uncertainties, and challenges in the Australian market. This report will describe the marketing mix components and will evaluate whether the marketing strategies and mix ele...

Read More arrow

MPK732 Marketing Management

Download : 0 | Pages : 18
  • Course Code: MPK732
  • University: Deakin Business School

    MyAssignmentHelp.com is not sponsored or endorsed by this college or university

  • Country: Australia

Answers: Part 1: Initial success factors of Fitbit: The case study presents several factors, which have led to the early success of Fitbit in the American market. Fitbit is an American wellness device manufacturer, which manufactures devices, which can track health conditions like pulse rate of the wearers. The factors, which have led to the success of Fitbit in the market of US, are as follows: Factor 1: Product line: The product line of ...

Read More arrow

Content Removal Request

If you are the original writer of this content and no longer wish to have your work published on Myassignmenthelp.com then please raise the content removal request.

5% Cashback

On APP - grab it while it lasts!

Download app now

*Offer eligible for first 3 orders ordered through app!

callback request mobile
Have any Query?