Calculate the justified values of Ayanda’s P/S based

on the trailing earnings.

Use the following information to answer questions 19 and 21.

Ayanda Ltd has a return on equity (ROE) of 25% and an equity

risk premium of 5.8%. Its shares are currently trading at R41.50. The company

reported trailing 12-month earnings per share of R1.50 and paid dividends of

R0.90 per share.  The market-based

multiples are a price-to-earnings (P/E) of 29.4, a price-to-book (P/B) ratio

of 8.2, and a price-to-sales (P/S) of 2.7. 

The profit margin on sales of 10.5%. The current treasury bond rate of

4.5%, and Ayanda Ltd’s beta is 1.2.

Calculate

the justified values of P/E, based on the trailing earnings.

Which one

of the following reasons best

explains why the valuation model you chose in

Use the

following information to answer question 17 and 18.

Chisasa Group is analysing the

potential acquisition of Tanaka Inc. To support this analysis, Chisasa has

gathered the following data on Tanaka with all figures expressed in millions of

rands.

The most appropriate model for valuing Tanaka Inc is the …

Which of the following statements

is

NTP Ltd makes

use of considerable debt in its capital structure. For the year 2024, 85% of

the company’s total assets of R450 000 000 were financed with debt capital. The

cost of debt before tax is 7.6%, and the cost of equity capital is 12.5%.  In 2024 NTP’s pre-tax income was R4.9 million,

and they have a tax rate of 42%.

Calculate the residual income of

NTP Ltd for 2024.

If the

required rate of return in question 13 increased by 0.5%, the value of the

share would ….

Use the following information to answer questions 11 and 14.

As an equity analyst, you analyse the financial statements of WNC Limited, an automobile manufacturer.  Your analysis results in the following assumptions and conclusions:

 ·       WNC’s earnings and Free Cash Flow to Equity (FCFE) growth will be 15 % per annum for two years and will then stabilise at 8 % per annum.

·       WNC will maintain its current dividend payout ratio.

·       WNC has a beta of 1.1.

·       Government bonds currently yield 6.4%, and the market equity risk premium is 5.4%.

·       The most recent dividend paid to WNC shareholders was R2.20 per share.

The statement of cash flows of WNC on 31 December 2024 is as follows:

Calculate the value of a WNC share

on 31 December 2024, using the two-stage FCFE model.

Calculate the free cash flow to

equity (FCFE) per share of WNC Ltd on 31 December 2024.

Use the following information to answer questions 11 and 14.

As an equity

analyst, you analyse the financial statements of WNC Ltd, an automobile

manufacturer.  Your analysis results in

the following assumptions and conclusions:

·      

·      

·      

·      

·      

 ·     WNC Ltd has 10,800 shares outstanding.

The statement

of cash flows of WNC Ltd on 31 December 2024 is as follows:

Calculate the value of a WNC share on 31 December 2024, using the

dividend discount model.