7 (a) It may be argued that information is the life-blood of an efficient stock market. Explain this proposition.

(b) Within the context of the ASX, explain the requirements and purpose of continuous reporting.

(c) Identify, using examples, different pieces of information that are regarded as being material and therefore should be reported to the stock exchange.

7. Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 12 percent, and that the maximum allowable payback and discounted payback statistic for the project are 2 and 3 years, respectively.

Use the discounted payback decision rule to evaluate this project; should it be accepted or rejected?

• 3.22 years, reject

• 3.29 years, reject

• 2.78 years, accept

• 2.69 years, accept

9. Woolworths Limited is a publicly listed corporation. Its core business is in supermarkets. Woolworths has decided to set up a major hardware goods chain in competition with the Wesfarmers Limited-owned Bunnings stores. Woolworths needs to raise additional equity capital to fund the expansion. The company advisors recommend the board of directors choose between a pro-rata rights issue and a private placement. Explain each of these funding alternatives and discuss the advantages and disadvantages of each alternative.

Find an article and critique on a current article related to project risk management.

Instructions:

Source must be scholarly in nature:

Outline the issue

Why is the article / topic important?

What does this article mean to you?

Write 1 - 3 pages in APA format

This article critique should be in APA format grammar, spelling and quality will influence your grade. Kindly also attach the article that you decide to use as a source. No pictures and no handwritten materials please.

What are the internal and external factors that influence the pricing decisions? Please this is a marketing question

QUESTION 5

Dolby Enterprises has the option to invest in machinery in Projects M and N but finance is only available to invest in one of them.

1. Assume that all cash flows take place at the end of the year except the original investment in the project which takes place at the beginning of the project.

2. Project M machinery is expected to be disposed of at the end of year 5 with a scrap value of R60 000.

3. Project N machinery is expected to be disposed of at the end of year 5 with a nil scrap value.

4. Depreciation is calculated on a straight-line basis.

5. The discount rate to be used by the company is 12%.

5.1 Required:

Use the information provided above by Dolby Enterprises to answer the following questions:

5.1.1 Calculate the Payback Period of Project N. (Answer must be expressed in years and months.)

5.1.2 Calculate the Accounting Rate of Return (on average investment) of Project M.

(Answer must be expressed to two decimal places.)

5.1.3 Calculate the Net Present Value of each project. (Round off amounts to the nearest Rand.)

5.1.4 Using your answers from question 5.1.3, which project should be chosen? Why?

5.2 A machine with a purchase price of R418 000 is estimated to eliminate manual operations and save the company R130 000 cash per year. The machine will last 5 years and have no residual value at the end of its useful life.

Required:

Calculate the Internal Rate of Return (answer expressed to two decimal places).

6. Two derivative products that may be offered through a stock exchange are an options contract and a futures contract. Briefly explain the main features of each of these products. Why might an investor use these products?

4. (a) As a stockbroker, you have been approached by a client seeking to establish a diversified portfolio of domestic shares. After identifying the client’s investment needs, you recommend the client use an exchange traded fund (ETF) to achieve her investment objectives. Explain to the client how an ETF will achieve the objective of a diversified share portfolio.

(b) The client also wishes to gain an investment exposure to the international share markets. Is it possible to use ETFs to achieve this objective? Explain.

3. (a) Discuss the secondary market role of a stock exchange and its importance to the corporation. Illustrate your answer by using examples.

(b) What is meant by the liquidity of the share market? Explain why liquidity in the secondary market is important both to shareholders and to the corporation.

Using a car industry, describe five different brands and how they have been positioned

. What happens to future values as the length of time involved increases?   What happens to present values as the length of time involved increases?

What are the total return, the current yield, and the capital gains yield for the discount bond? (Assume the bond is held to maturity and the company does not default on the bond.)

You are trying to evaluate a private firm’s potential as a good investment opportunity. Your mentor at the investment bank you interned during the summer told you to collect information on comparable firms, which will help you find the WACC of the private firm. The private firm has ND/E ratio of 2. The risk free rate is 2%. Market risk premium is 5%. Cost of debt for the private firm is assumed is 6%. The tax rate is 50%. The following table lists the information you have gathered:

What is the net debt for firm A?

Q2. Calculate the asset beta for firm D.

Q3. What is the average asset beta you should use combining all the comparable firms?

Q4. What is the equity beta for the private firm?

Q5. What is the cost of equity for the private firm? 0.0/1.0 point (graded) Input the cost of equity for the private firm. （use the result from problem 3） ______ %(keep two decimal points)

Jumbo Enterprises plans to borrow R1 000 000 for one year. The stated interest rate is 15% per annum.

Required:

Use the information provided above to calculate the effective interest rate if:

4.3.1 The interest is discounted

4.3.2 There is a 25% compensating balance requirement

Question 3 [36]

Rapid Print CC is a company specialising in 3D printing for commerce and industry. The management committee is considering adding an additional 3D printer to its production facilities and is considering purchasing one of two suitable 3D printers available for their purposes. Both printers, LaserX and 3Dpro, are under consideration. The printing manager and the financial manager can expect a minimum return of 10% per annum from either printer. The acquisition price for LaserX is R350 000 and for 3Dpro it is R600 000. They have also prepared the following expected net cash flows for the expected 4-year life span of the two printers:

LaserX                3Dpro

80 000                150 000

100 000               250 000

150 000               275 000

180 000               300 000

Required

Show all calculations.

3.1. Calculate the net present value (NPV) for both printers and the internal rate of return (IRR) for LaserX. The IRR for 3Dpro = 20%. It is recommended that you use 22% as an alternative cost of capital for LaserX. (29)

3.2. Recommend to Rapid Print’s management which printer they should consider purchasing, providing specific reasons for your recommendations.