Financial Management for Decision Makers 7th. Edition by Peter Atrill | 9781292016061 | 129201606X | Holooly

Financial Management

Financial Management for Decision Makers

347 SOLVED PROBLEMS

Question: 4.A.17

A garage has an old car that it bought several months ago for £3,000. The car needs a replacement engine before it can be sold. It is possible to buy a reconditioned engine for £300. This would take seven hours to fit by a mechanic who is paid £15 an hour. At present, the garage is short of work, ...

Verified Answer:

The minimum price is the amount required to cover ...

Question: 5.5

Zeta Computing Services Ltd has recently produced some software for a client organisation. The software has a life of two years and will then become obsolete. The cost of developing the software was £60,000. The client organisation has agreed to pay a licence fee of £80,000 a year for the software ...

Verified Answer:

The four possible outcomes attached to this projec...

Question: 5.A.13

Can you think what the practical problems with this approach might be? ...

Verified Answer:

Subjective judgement is required when assigning an...

Question: 3.A.28

Assume that a business has internally generated goodwill that was created in earlier years. If this resource were introduced as a non-current asset with an indefinite life in the current statement of financial position, what would be the effect on ROSF, ROCE and the gearing ratio? ...

Verified Answer:

Total assets will increase and equity will also in...

Question: 11.Act.3

Libra plc has an estimated terminal value (representing cash flows beyond the planning horizon) of £100 million. What is the present value of this figure assuming a discount rate of 12 per cent and a planning horizon of: (a) 5 years (b) 10 years (c) 15 years? (Hint: You may find it helpful ...

Verified Answer:

The answers are: (a) £100m × 0.567 = £56.7 million...

Question: 5.Act.4

Use the table provided in Appendix B to calculate the equivalent annual annuity for each machine referred to in Example 5.2. Which machine is the better buy? ...

Verified Answer:

The equivalent annual annuity for Machine A (in £0...

Question: 4.Act.12

What is the NPV of the Chaotic Industries project from Activity 4.2, assuming a 15 per cent opportunity cost of finance (discount rate)? (Use the table in Appendix A.) ...

Verified Answer:

Remember that the inflows and outflow are expected...

Question: 2.A.1

Assume that the managers of a business are considering only one option. Could projected financial statements still help them? ...

Verified Answer:

Where only one course of action is being considere...

Question: 2.2

The financial statements of Burrator plc for the year that has just ended are as follows: In line with previous years, a dividend of 50 per cent of the profit for the year was proposed and paid during the year. The following information is relevant for Year 9: 1.Sales revenue is expected to be 10 ...

Verified Answer:

To prepare the projected income statement, we calc...

Question: 8.5

The information for Semplice Ltd in Example 8.4 can be used to illustrate how the indifference point is calculated. Let x be the profit before interest and taxation (PBIT) at which the two financing options provide the same EPS. ...

Verified Answer:

Let x be the profit before interest and taxation (...

Loading...