INTERNATIONAL TRAINING COLLEGE - LINGUA

Towards Educational Excellence

NCHE Reg. No: R0014
NQA Accreditation No: 000095

DEPARTMENT OF BUSINESS AND MANAGEMENT

ASSIGNMENT 3

Lecturer: W. MUSHONGA Due Date: 22 APRIL 2020

QUALIFICATION : DEGREE IN ACCOUNTING AND FINANCE ( NQF Level 7)

MODULE : FINANCIAL MANAGEMENT 2 (NQF Level 7)

ASSIGNMENT :3

TOTAL MARKS : 30 marks

ASSIGNMENT 3

INSTRUCTIONS:

• Your assignment must have a cover page with your name, student number, course
name and lecturer name
• Marks awarded will be indicated both as actual and percentage
• The assignment must be the work of the student and not shared or completed by any
other student and must be typed.
• Students will be penalised for plagiarising or simply copying passages from the study
notes or web sites, other texts and from another student’s assignment/project/rough
work, etc., without any referencing attached thereto.
• Students may work together but must not submit similar or identical assignments. You
must be able to show that you worked independently.
• Retain a copy of each assignment before submitting it, in case the original does not
reach the lecturer.
• Students who are mailing their assignments must ensure that the assignment
reaches the lecturer before or on the due date.
• Assignments may NOT be submitted via fax
• Your assignment MUST have references (APA method) written in alphabetical order.
• Use ARIAL -12 to type your work. Your work must be justified.
• Consult the lecturer if you do not understand assignment questions by calling 061-
301032

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Question 1

Wakawaka Investment has the following summarised financial statements:

Statement of Comprehensive Income for the year ended 31 December 2014.

NB. All figures are in N$

Turnover 1,400,000

Operating expenses 860,000

Profit before interest and tax 540,000

Interest 7,000

Profit before tax 533,000

Tax 160,000

Profit after tax 373,000

Dividend 186,000

Retained earnings 187,000

Statement of Financial Position as at 31 December 2014

Non current assets 2,300,000

Net working capital 800,000

3,100,000

Ordinary Share Capital (10,000 fully paid) 2,400,000

10% Debentures 700,000

3,100,000

The current share price is N$135 and the tax rate is 30%

Required

Calculate the following:

(a) Dividend per share. [4 Marks]

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(b) Return on equity. [4 Marks]

(c) Gearing ratio. [4 Marks]

(d) Cost of equity capital. [5 Marks]

(e) Weighted cost of capital. [13 Marks]

End of assignment.