Business, 31.03.2021 15:50 gobbler80

(50 marks] Question
You are considering an investment in a company (Strongbow Warehousing Ltd.) that provides warehousing
services to the FMCG industry in Gauteng To make an informed decision, you requested the management
of the company to provide you with the necessary financial information. The following information was
provided
The free cash flow for the next 5 years at Strongbow Warehousing Ltd is expected to be as follows:
Years from now
Future value
R3 000 000
R3 000 000
2
R3 500 000
3
R3 500 000
4
R3 500 000
5
The risk-free rate of the long-terms government bonds is 8% after tax
The market risk premium is 6%
The beta factor of Strongbow Warehousing Ltd has been 1.4 for the past 5 years and is also expected
to be a reliable forecast of the future beta of Strongbow Warehousing Ltd.
The terminal value after 5 years will be R10 000 000
There are 50 000 shares in issue
Questions:
1.1) Calculate the value of a share in Strongbow Warehousing Ltd. (10 Marks)
1.2) If you are offered to buy shares in Strongbow Warehousing Ltd at R150.00 a share, will you consider it
good value? (5 Marks)
1.3) Fully explain what is meant with cost of equity and how it is calculated (15 Marks)
1.4) In theory, how can the value of the shares of Strongbow Warehousing Ltd be increased? What
contribution can the logistics department make? (20 marks)

Answers: 3

Show answers

Another question on Business

Business, 22.06.2019 01:30

Consider the following limit order book for a share of stock. the last trade in the stock occurred at a price of $50. limit buy orders limit sell orders price shares price shares $49.75 500 $49.80 100 49.70 900 49.85 100 49.65 700 49.90 300 49.60 400 49.95 100 48.65 600 a. if a market buy order for 100 shares comes in, at what price will it be filled? (round your answer to 2 decimal places.) b. at what price would the next market buy order be filled? (round your answer to 2 decimal places.) c. if you were a security dealer, would you want to increase or decrease your inventory of this stock? increase decrease

Answers: 2

Answer

Business, 22.06.2019 03:00

Which of the following is an effective strategy when interest rates are falling? a. use long-term loans to take advantage of current low rates. b. use short-term loans to take advantage of lower rates when you refinance a loan. c. deposit to a short-term savings instrumentals to take advantage of higher interest rates when they mature. d.select short-term savings instruments to lock in earnings at a current high rates.

Answers: 1

Answer

Business, 22.06.2019 08:30

What is the equity method balance in the investment in lindman account at the end of 2018?

Answers: 2

Answer

Business, 22.06.2019 15:40

Acompany manufactures x units of product a and y units of product b, on two machines, i and ii. it has been determined that the company will realize a profit of $3 on each unit of product a and $4 on each unit of product b. to manufacture a unit of product a requires 7 min on machine i and 5 min on machine ii. to manufacture a unit of product b requires 8 min on mchine i and 5 min on machine ii. there are 175 min available on machine i and 125 min available on machine ii in each work shift. how many units of a product should be produced in each shift to maximize the company's profit p?

Answers: 2

Answer

You know the right answer?

(50 marks] Question
You are considering an investment in a company (Strongbow Warehousing Ltd....

Questions