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1. A femoral hernia is directed downwards, forewards, laterally and then upwards

2. Pulsation of the posterior tibial artery is felt in front of the medial malleolus.

3. Loss of evertion of the foot is a result of injury of the tibial nerve.

4. Loss of sensations derived from the sole of the foot is due to common peroneal nerve injury.

5. The medial meniscus is more commonly injured compared with the lateral.

6. A paralyzed peroneus longus muscle will weaken the longitudinal arch of the foot.

7. Loss of dorsiflexion of the foot (foot drop) is a result of common peroneal nerve injury.

8. To maintain better blood supply to the lower limb through the cruciate anastomoses, it is recommended to ligate the femoral artery immediately below the inguinal ligament.

9. The coverings of the femoral hernia are: the skin, the superficial fascia, the deep fascia, the cribriform fascia and the anterior wall of the femoral sheath.

10. Loss of sensations on the medial side of the foot is due to injury of the saphenous nerve.

 

 

 

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(a) Explain fully the effect of the use of debt capital on the weighted average cost of capital of a company. (6 marks) (b) Millennium Investments Ltd. wishes to raise funds amounting to Sh.10 million to finance a project in the following manner: Sh.6 million from debt; and Sh.4 million from floating new ordinary shares. The present capital structure of the company is made up as follows: 1. 600,000 fully paid ordinary shares of Sh.10 each 2. Retained earnings of Sh.4 million 3. 200,000, 10% preference shares of Sh.20 each. 4. 40,000 6% long term debentures of Sh.150 each. The current market value of the company’s ordinary shares is Sh.60 per share. The expected ordinary share dividends in a year’s time is Sh.2.40 per share. The average growth rate in both dividends and earnings has been 10% over the past ten years and this growth rate is expected to be maintained in the foreseeable future. The company’s long term debentures currently change hands for Sh.100 each. The debentures will mature in 100 years. The preference shares were issued four years ago and still change hands at face value. Required: (i) Compute the component cost of: – Ordinary share capital; (2 marks) – Debt capital (2 marks) – Preference share capital. (2 marks) (ii) Compute the company’s current weighted average cost of capital. (5 marks) (iii) Compute the company’s marginal cost of capital if it raised the additional Sh.10 million as envisaged.

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