Use the information to answer questions 19 and 20.

An analyst is

conducting a valuation of Makhahleng Limited pays 45% of its earnings as

dividends and is expected to exhibit a ROE of 15% over the next three years.

The book value per share of Makhahleng is currently R54.20, the required return

on equity is 10% and annual earnings per share are R18, R20 and R22 for year 1,

year 2 and year 3 respectively. Thereafter, the residual income will remain

constant forever at year 3’s residual income.

Use the information to answer questions 19 and 20.

An analyst is

conducting a valuation of Makhahleng Limited pays 45% of its earnings as

dividends and is expected to exhibit a ROE of 15% over the next three years.

The book value per share of Makhahleng is currently R54.20, the required return

on equity is 10% and annual earnings per share are R18, R20 and R22 for year 1,

year 2 and year 3 respectively. Thereafter, the residual income will remain

constant forever at year 3’s residual income.

The terminal

value based on a perpetuity of year 3’s residual income is closest to:

Identify the statement that is most likely correct from the

following alternatives:

The average ROE

for Rich Limited over the last business cycle was 30%. Rich’s earnings per

share for 2024 is expected to be R6.80. The dividend payout ratio is 60%, and

the current book value per share is R75. Shares are trading in the market at

R67. Rich’s normalised earnings per share are closest

Use the

following information on Sipho Limited to answer question 16.

An analyst researching Sipho Limited has determine

that the firm has:

·    

·  

·  

·  

·    

·  

Calculate the firm’s

P/S ratio based on the above fundamentals.

Use the

information below to answer question 15 .

Shandu Limited announced total liabilities of R500

million and total assets of R790 million at the end of 2019. Shandu Limited has

25 million shares outstanding, ROE of 22.30% and dividend payout of 80%. The

firm’s required rate of return is 10.22% and its market price is R40.58.

Determine the

value of Shandu Limited using a single-stage residual income model.

Use the following information to answer questions 13 and 14.

An analyst

following Sudwala Limited has compiled the following information for the year

ended 2025 in preparation for an additional analysis to include in a report she

has been asked to produce (data is in hundreds of millions of Rands). Sudwala

uses preference shares, bond and equity financing.

Preference

share dividends                                                                R18

Net income

available to common shareholders                              R135

Increase in investment

in working capital                                         R32

Increase in

investment in fixed capital                                               R54

Amortisation

and impairment of intangibles                                     R4

Depreciation                                                                                            R40

Interest

expense                                                                                 R31.84

Tax rate                                                                                                 25%

Long-term growth rate of FCFF                                                        3.20%

The value of Sudwala Limited equity is:

Use the following information to answer questions 13 and 14.

An analyst

following Sudwala Limited has compiled the following information for the year

ended 2025 in preparation for an additional analysis to include in a report she

has been asked to produce (data is in hundreds of millions of Rands). Sudwala

uses preference shares, bond and equity financing.

Preference

share dividends                                                                  R18

Net income

available to common shareholders                               135

Increase in investment

in working capital                                           R32

Increase in

investment in fixed capital                                                R54

Amortisation

and impairment of intangibles                                     R4

Depreciation                                                                                             R40

Interest

expense                                                                                R31.84

Tax rate                                                                                                     25%

Long-term growth rate of FCFF                                                         3.20%

The weighted average cost of capital (WACC) of Sudwala is closest to:

Use

the following information to answer questions 11 and 12.

Musina Limited has a required rate of equity return of

15% and a growth rate of 4%. It also has an industry P/E of 25 and a retention

rate of 40%.

Calculate the P/E based on the next year’s earnings.

Use

the following information to answer questions 11 and 12.

Musina Limited has a required rate of equity

return of 15% and a growth rate of 4%. It also has an industry P/E of 25 and a

retention rate of 40%.

Calculate the P/E of Musina based on the

trailing earnings.