Q1- Kyot limited finances a range of similar services to their clients. Kyot Management Co., Ltd. are considering offer the new service will require of them have a class factory in the June 1, 2004.
Cool intended to buy the plant at a price of $ 300,000, paid on the day of acquisition. It is estimated that the asset will not have a market value by May 31, 2008 and will be Tkhanha that day.
A study of the expected sales of the new service suggests that it will be as follows:
End of may 000$
2005 220
2006 250
2007 300
2008 260
Differential operating costs associated with the current service is estimated at 30% of sales value.
If the new service is not provided, it is conceivable that there is a surplus of labor so that the total value paid for this surplus is $ 20,000 on May 31, 2007. This product was put under consideration in the analysis, which was based on which an original decision to begin the current service, since several Years. If you provide the new service, there will be a surplus of labor in service by the end of May 31, 2008, and the value of surplus labor is paid $ 22,000 at the time.
Labor cost is the cost of a fixed (meaning it does not change with the level of productivity). It will be the same as the number of employees in the event of any provision of the two services.
Regardless of what has already been, the appreciation that does not have extra operational costs when viewing any of the two services.
The cost of funding to support the project is expected to be 10 percent for the year.
Question -
(A) attended the table is derived appropriate net financial liquidity associated value with the decision whether Kyot Limited must to own factory and offers new service, based on the information leading up to, and used to derive a conclusion concerning the decision on the basis of net current draft value.
(B) The estimated internal rate of return for the project.
(C) Discuss the factors that needed Cool puts it into account with respect to the resolution, except for net present value (NPV) and internal rate of return (IRR).
Q2- Dalston Co., Ltd. is considering hiring a factory building on premiums (Lease) from January 1, 2011, as well as investment in a new location, and use it to produce a new product called Jyzewn.
Since it is clear that there is no possibility to continue actively after a four-year period, we decided to evaluate the new product on the four-year period of manufacturing and sales.
Under the conditions of the premiums (Lease) the company will pay 100,000 pounds a year in advance of 1 January.
It is expected to cost 600,000 pounds factory. Will be the purchase and payment on 31 December 2010 is expected to be closed project (do not produce - produce zero) at December 31, 2014. The company will deduct Alahlakih value (depreciate) to the original accounts on the basis of a written (25% per year).
Each unit of Aljyzewn destined to give the cost of a changing labor worth £ 200 and the cost of variable materials worth £ 100. Aljyzewn manufacturing will carry on the annual quota for the administrative expenses of the company's total value of £ 150,000 per year. It is expected to manufacture and sell Aljyzewn that increases the administrative cost worth 90,000 pounds per year.
It is expected to manufacture and sell units Aljyzewn be as follows:
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end of December
|
Year
|
geverson units
|
|
2011
|
400
|
|
2012
|
600
|
|
2013
|
500
|
|
2014
|
200
|
It expected to each unit sold value of 1400 pounds.
Fiscal year ends on the company by the end of December 31 of each year.
It made the decision, with the adventurous risk factor for this project, that uses a discount rate of 15% per year.
Required:
(A) The estimated net annual cash Alsaullac related (annual net relevant cash flows), and use this information to evaluate the project on the basis of net cash value (net present value) on January 1, 2011.
(B) The estimated internal rate of return for this project (internal rate of return).
Q3 - Pulidaa company (public limited company, plc) is financing company (shares) has developed a new kind of information processing devices called Datamastr.
Datamastr development cost 1 million pounds. Pulidaa policy expenses are deducted in equal installments during the product developer in the place of manufacture and production life.
If you decided to Datamastr favor of commercial production, the production will begin on the first of January, 2011, the first working day in the accounting year. Sales of Datamastr revenues estimated as follows:
M
2011 4
2012 8
2013 8
2014 4
It estimated that the different expenses by 30% of the sales company will bear the burden. In addition to the increased fixed expenses by 1 million pounds per year the company will bear the burden.
Datamasters the year 2011 and discharged manufactured by an estimated amount of one million pounds in the 31 of December 2014, expect to receive the money in cash on the same day with.
Our objectives for the current, it was assumed that the plant will receive a 25% discount exemption from taxes due in the year of purchase and every year after being owned by the company, except for the last year. In the last year, the difference between the value of the plant, which has reduced for taxes and sales revenues will be either allowed the company an additional tax exemption, if the proceeds of the sale less the discount value or which carried the company if the proceeds of the sale is greater than the value of the tax discount.
Datamasters expected to be harmful to one other company Product R affect to the extent of up to 25% of sales Datamastr value. Product various other costs worth 40% of the sales of this product value. Any decline in the sales of the other product will have no impact on any of the fixed expenses.
Working capital will be intertwined with Datamasters the final product will be as follows:
Trade receivable 15% of the value of sales
Shares traded 20% of disparate expenses
Trade creditors 10% of the disparate expenses
Working capital will need to be present at the beginning of the year under review. Changes in working capital will not have any effect on taxes.
Managers want returns on capital at a minimum of 15% per year after taxes.
Assume that the rate of company tax is 30% which is paid at the end of the accounting year relating there to.
Questions -
(A) Make a table and net financial Alsaullac related and joint decision to appear in the production and use Datamasters (table) with the recommendation in the decision on the basis of net present value (NPV).
(B) The values and discussed the sensitivity in the decision reached at the first requirement (a) with respect to the tax rate on the company.
Q4- Available Carrington Co., Ltd. to invest exclusively in aAlmtsawitin both occasions:
Koiseid Sports Complex or Rimondz compound cinemas. Estimated cash flow for the two compounds as follows:
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Zayed Sports Complex
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Redmond compound theaters
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|
Liquidity, cash out (outgoing) Current investment
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$500,000
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$360,000
|
|
Annual net cash inflows of liquidity (belonging to) the first year
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$390,000
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$280,000
|
|
Second Year
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$90,000
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$80,000
|
|
Third Year
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$120,000
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$140,000
|
|
Liquidity, cash inflows from the residual value
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$70,000
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$60,000
|
If the cost of funding was estimated to be 10% of the work / project, calculate the following:
A) Capital restoration period in both projects (payback period)
B) The net present values of both projects (Net Present Values NPV)
V) Internal rates of return for both projects (Internal Rates of Return)
W) Remember what are the basic concepts of the capital restoration (payback period), the net present values (NPV), internal rate of return. Compare three methods of relating to terms of use
C) Explain whether you think that the above calculations are based on a simplified picture of the truth / reality. And if so, what are the other factors that realistic policymakers should keep in mind?
Q5- Grobst Co., Ltd. has developed a new mechanical game called Nipper which Ttoreha total cost of $ 300,000. To evaluate the performance of commercial (commercial viability) of the nipper was the work of a survey of the market (market survey) worth $ 35,000. This poll suggests that Alnneber will have a lifetime market (in the market) for a period of 4 years, and that the possible TibaGrobst Co., Ltd. Alnneber of $ 20 for each Napier. Alnneberdemand for each of the four years that have been estimated are as follows:
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Number Amperes
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Probabilities of occurrence
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11,000
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0,3
|
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14,000
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0,6
|
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16,000
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0,1
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If the decision was made to produce Alnneber, it will be the production and sale immediately. It requires the use of production machines owned by the company that bought the company three years ago for $ 200,000. If no production Alnneber, the machines will be sold for $ 85,000, knowing that there is no other use of the machines. If used to produce Alnneber, the machines will be sold for $ 35,000 at the end of the fourth year.
Each nipper will need to work one hour at a rate of $ 8 per hour. Any work that bears an estimated $ 10,000 in costs related to duplicate this rate at the end of four years
And raw materials will cost $ 6 for nipper and this will lead to increased fixed costs? To $ 15,000
It is believed that Grobst will not go ahead in the production of Alnneber, it could be sold the rights to another producer for $ 125,000 payable immediately. The cost of capital for Grobst is 12 per cent per annum.
Requirements:
- on the basis of net present value, calculate and decide whether it should be limited Grobst production and sales continue). Ignore the existence of taxes and inflation) hypothesis
- discussed and the values of the expected net present value approach in the decision-making process, with advantage and disadvantages
Q6- The meaning of market capitalization line and its relation to capital assets or Asmy- CAPM "pricing model" Explain. Explain the difference between the market capitalization line and the stock market. (No need to mention the mathematical equations to prove the required answer)
- Briefly mention the key assumptions relating to capital assets or the so-called CAPM and the values of authenticity. Explain the purpose of the CAPM and if it can be applied in the truth.
- Identify the key principles of the four ways to evaluate investment. I remember the basic rule of each method and its relationship to decision-making. Then explain how those roads wealth of shareholders
Q7- Suppose you're a financial director in the company thinking of buying a new device reduces the effort of labor in one of its projects. There are two types of machines that can do the job, but the choice will fall on only one to be purchased. The estimated data for Oltien are:
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The first machine
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The second machine
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|
000$
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000$
|
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The initial cost
|
120
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120
|
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Savings in the cost of labor used in 5 years
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20
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30
|
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Savings in the cost of labor per year
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|
|
|
y 1
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40
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20
|
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y2
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40
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30
|
|
y3
|
40
|
50
|
|
y4
|
20
|
70
|
|
y5
|
20
|
20
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The machine will be chosen according to the following criteria:
- Net Present Value
- IRA (a mathematical technique used in the evaluation of the machines used in the project)
- the accounting rate of return
- Payback period
It will be overlooked taxes throughout the period with dealing with savings as a product at the end of the year. Must calculations presented clearly.
Q8- Tick before the correct statement:
1. Investor owns shares in the company, the price of each share is 2.5 pounds. The investor paid 0.40 pounds to buy a selection of which can by 3 pounds selling shares pounds per share within six months. If you have reached the market value per share to 3.5 pounds, the choice value per share will be:
- Nothing.
- 0.5 pounds.
- 1 pounds.
- 0.40 pounds.
2. To have a relationship with a particular decision, it needs any variety of data to be:
- a financial background and has a relationship with the future.
- have a relationship with the future goals of prosecution.
- it has to do with the future and to be mixed among the choices.
- to be mixed among the choices and has a relationship with the targets of prosecution.
3. In the content management system of Finance, among other (agency costs) related to:
- part of the travel costs for staff management.
- costs incurred by the managers who Aatsrvon for the benefit of shareholders equity holders.
- the cost of employing temporary staff management.
- the cost of advertising for the company's products
4. Under generally accepted accounting principles, the assets in the balance sheet shown in the photograph:
- the value of the cost.
- economic value of the project
- The current cost of the project to replace,
- the current market value.
5. ratio of price / revenue are:
- Profit after tax return for each share dividend divided by earnings per share.
- Profit after tax per share dividend yield divided by the retained profit per share.
- divided by the share price on the profit after tax per share.
- the share price divided by earnings per share