MAC3702 ASSIGNMENT 2 SEMESTER 1 – 2023 (786840)

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MAC3702 ASSIGNMENT 2 SEMESTER 1 – 2023 (786840)

QUESTION 1 (36 Marks)

Rezesco Ltd (“Rezesco”) is an investment company that holds various investments across several
industries. The company’s investments are limited to the Southern African Development Community
(SADC) member countries. Rezesco’s has a 28 February financial year-end.

(a) Assume that Electron is discontinued and that Rezesco acquires the 75% equity stake
in Super Electronix on 1 March 2023:

(i) Using the Price/Earnings (P/E) multiple valuation method, establish the
reasonableness of the cash offer tabled by Rezesco to the shareholders of Super
Electronix for their 75% equity stake in Super Electronix as at 1 March 2023.

(b) By reference to information evident from the scenario, discuss seven (7) non-financial
factors that Rezesco will need to consider in its assessment of Super Electronix for
possible acquisition.

(c) Advise Rezesco as to which two other valuation models can be used to establish the
reasonableness of the cash offer tabled by Rezesco to the shareholders of Super
Electronix for their 75% equity stake in Super Electronix as at 1 March 2023.

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