Reference no: EM133057044

Question -

Q1. A Company has debt of R90 million and a debt/equity ratio of 0.75, the Operating profit before tax was R32 Million, tax is 30%, the WACC is 13.88% is the company adding or destroying value & how much?

a. Destroying value R5,7 million

b. Destroying value R7.3 million

c. Adding value R5.7 million

d. Adding value R7.3 million

Q2. If a company has split its shares a few times, so that an Investors who owned one share before its first stock split would own 24 shares today. If the company had never split its stock, shares would have been trading at R3,000. What is the current share price?

a. R125

b. R3,000

c. R72

d. R24

Q3. The operating profit = R30 m, LT debt is R80 m, Total capital is R180 M. The cost of Debt is 8%, the cost of Equity is 12%, the tax rate is 28%. The Value added is:

a. R8.99 Million

b. R16.61 Million

c. R21.60 Million

d. R4.99 Million

Q4. A company has a weighted average cost of capital of 9%. The cost of equity is 12% and the cost of debt is 10%, the tax rate is 30%. What is the companies target debt to equity ratio?

a. 66%

b. 40%

c. 60%

d. 150%