Question 1 Your business partner is interested in property investment and has been looking at properties in the Gauteng area for the last couple of years. During 2022 he invested in buildings in the Gauteng area. He intends to use these buildings as shared office space for business travellers who travel weekly between Johannesburg and their coastal residential homes. The buildings require renovations. The total cost of the renovations is R80 000 000. The renovations will be completed by 31 December 2022. The expenditure will occur evenly throughout the last six months of the 2022 year. The R80 000 000 needs to be financed entirely through a variety of loans. Your company has an excellent credit record, and the following is the value and related annual interest rate for each loan granted: Source Nedbank loan Convertible shares Government loan Foreign bonds Cryptocurrency Assume a 365-day year. REQUIRED: Q.1.1 Calculate the capitalisation rate. Amount (R) 30 000 000 15 000 000 15 000 000 12 000 000 8 000 000 Interest rate 15% 12% 5% 20% 7%

Question 1 Your business partner is interested in property investment and has been looking at properties in the Gauteng area for the last couple of years. During 2022 he invested in buildings in the Gauteng area. He intends to use these buildings as shared office space for business travellers who travel weekly between Johannesburg and their coastal residential homes. The buildings require renovations. The total cost of the renovations is R80 000 000. The renovations will be completed by 31 December 2022. The expenditure will occur evenly throughout the last six months of the 2022 year. The R80 000 000 needs to be financed entirely through a variety of loans. Your company has an excellent credit record, and the following is the value and related annual interest rate for each loan granted: Source Nedbank loan Convertible shares Government loan Foreign bonds Cryptocurrency Assume a 365-day year. REQUIRED: Q.1.1 Calculate the capitalisation rate. Amount (R) 30 000 000 15 000 000 15 000 000 12 000 000 8 000 000 Interest rate 15% 12% 5% 20% 7%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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