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EBAD401: Financial Management (2025)
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As part of your project analysis, you also review various actions that management could take if a project encounters certain situations after it is implemented. This additional analysis is referred to as __________ planning.
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The cash flow from projects for a company is computed as the______________
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The Blitz Sports Company has issued 10% coupon bonds. Coupons are paid on a semi-annual basis, the bonds have a R1 000 par value and will mature in 10 years. The bonds are currently selling at a price of R900. The company's tax rate is 28%. What is the firm's component cost of debt for purposes of calculating the weighted average cost of capital (WACC)?
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The Golden Shoe Ltd would like to add a new product to complete their line-up. They want to know how many units they must sell to limit their potential loss to their initial investment, i.e. cash break-even. What is this quantity if their fixed costs are R12 000, the depreciation expense is R2 500, and the contribution margin is R1.30? (Round to whole units)
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Delta Mare Ltd. has received requests from each of the departments within their company for capital investment funds for next year. The management of Delta Mare decides to allocate the available funds based on the net present value (NPV) of each proposal starting with the highest NPV first. Management is following a practice known as _____ rationing.
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The IPL Sports Company has issued 8% coupon bonds. Coupons are paid on a quarterly basis, the bonds have a R1 000 par value and will mature in 10 years. The bonds are currently selling at a price of R900. The company's tax rate is 28%. What is the firm's component cost of debt for purposes of calculating the weighted average cost of capital (WACC)? Round to two decimal places.
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In addition, the IPL Sports Company has issued preference shares. The firm has 10 000, 6% preference shares in issue currently selling for R95 per share. What is the firm's component cost of preference shares for purposes of calculating the weighted average cost of capital (WACC)? Round to two decimals
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Jamestown Ltd. currently produces boat sails and is considering expanding its operations to include awnings for homes and travel trailers. The company owns land beside its current manufacturing facility that could be used for the expansion. The company bought this land ten years ago at a cost of R250 000. Today, the land is valued at R425 000. The grading and excavation work necessary to build on the land will cost R15 000. The company has some unused equipment which it currently owns valued at R60 000. This equipment could be used for producing awnings if R5 000 is spent for equipment modifications. Other equipment costing R780 000 will also be required. What is the amount of the initial cash flow for this expansion project?
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Ernst's Electrical has a bond issue outstanding with ten years to maturity. These bonds have a R1 000 face value, a 5% coupon, and pay interest semi-annually. The bonds are currently quoted at 96% of face value. What is Ernst's pre-tax cost of debt?
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Larry's Lanterns is considering a project which will result in a NPAT of R14 400 per year for the next five years. The project will cost R290 000 and be depreciated straight-line to a book value of zero over the life of the project. Larry's has a required accounting return of 8%. The project should be _________ because the ARR is __________
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