Marble Co wishes to calculate its current weighted average cost of capital, as part of a review ofthe companys performance in delivering shareholder value. Dividends per share paid to ordinaryshareholders in recent years are as follows:Year 20X720X6 20X520X4Dividend ($/share)0.800.780.730.69The dividend for 20X8 of $0.84 per share is due to be paid shortly. Marble Co has in issue, 226milion ordinary shares with a nominal value of $0.50 per share and a current cum dividend shareprice of $11.93 per share.Marble Co also has in issue, 20 million preference shares with a nominal value of $1.00 per shareand a current ex dividend market price of $2.27 per share. A 25% per share preference dividend hasjust been paid.Marble Co is partly financed by 6.5% convertible loan notes with a total nominal value of $94mInterest on the loan notes has just been paid and the loan notes have an ex-interest market value of$107.11 per $100 nominal value loan note. At the end of five years, the loan notes will either beredeemed at nominal value or converted into eight ordinary shares of Marble Co, perloannote.Future share price growth is expected to be 6% per year. The loan notes are secured on thenon-current assets of Marble Co.Marble Co pays corporation tax of 26%.

Pulorough Co produces household electrical goods for its home country market and for marketsin neighbouring countries. Pulorough Co is planning to make a major investment in new productionfacilities in order to produce an upgraded model of its cooker. Pulorough Cos finance director hasassigned probabilities to a number of possible sales volumes of this new model, based on PuloroughCosprevious experience of launching product upgrades. He has calculated annual expectedvalues for sales for the four-year time period over which the investment will be assessed.However, after a number of years of strong economic growth, Pulorough Cos home country and its neighbours appear likely to enter a period of recession, meaning that consumers may be less wiling to spend money on new kitchen goods.The initial investment cost will be $39m. The finance director has assumed that there will be zero realisable value at the end of the four years. Working capital can be ignored.The expected volumes of sales are :Year 1 2 3 4 60,000 150,000 140,000 80,000Pulorough Co pays corporation tax of 25% per year one year in arrears.No tax-allowable depreciation is available on the investment expenditure.Pulorough Co currently uses 11% as the after-tax discount rate to appraise investments like this.One of the other directors has commented that he thinks the level of contribution that the financedirector has assumed is too high. He also wondered that, with the economic uncertainty, the cost ofcapital should be higher. The finance director has said that he will prepare sensitivity calculations, showing in relative terms the level of change in contribution and discount rate that would produce anil net present value. He will assume that the contribution will be lower by the same percentage eachyear.Another director has stated that she has heard that probability analysis can be helpful indecision-making, and wonders if this will be the same as the sensitivity analysis that the financedirector is going to prepare.

单选题A company has in issue loan notes with a nominal value of $100 each. Interest on the loan notes is 6% per year,payable annually. The loan notes will be redeemed in eight years’ time at a 5% premium to nominal value. The before-tax cost of debt of the company is 7% per year. What is the ex interest market value of each loan note?

单选题The following scenario relates to questions 21 to 25. Ring Co has in issue ordinary shares with a nominal value of $0.25 per share. These shares are traded on an efficient capital market. It is now 20X6 and the company has just paid a dividend of $0.450 per share. Recent dividends of the company are as follows: Ring Co also has in issue loan notes which are redeemable in seven years time at their nominal value of $100 per loan note and which pay interest of 6% per year. The finance director of Ring Co wishes to determine the value of the company. Ring Co has a cost of equity of 10% per year and a before-tax cost of debt of 4% per year. The company pays corporation tax of 25% per year.

单选题Which of the following statements concerning working capital management are correct? 1 Working capital should increase as sales increase 2 An increase in the cash operating cycle will decrease profitability 3 Overtrading is also known as under-capitalisation

单选题Crag Co has sales of $200m per year and the gross profit margin is 40%

单选题The following scenario relates to questions 26 to 30. The following information relates to an investment project which is being evaluated by the directors of Fence Co, a listed company. The initial investment, payable at the start of the first year of operation, is $3.9 million. The directors believe that this investment project will increase shareholder wealth if it achieves a return on capital employed greater than 15%. As a matter of policy, the directors require all investment projects to be evaluated using both the payback and return on capital employed methods. Shareholders have recently criticised the directors for using these investment appraisal methods, claiming that Fence Co ought to be using the academically-preferred net present value method. The directors have a remuneration package which includes a financial reward for achieving an annual return on capital employed greater than 15%. The remuneration package does not include a share option scheme.

单选题A company has 7% loan notes in issue which are redeemable in seven years’ time at a 5% premium to their nominal value of $100 per loan note. The before-tax cost of debt of the company is 9% and the after-tax cost of debt of the company is 6%. What is the current market value of each loan note?

单选题Thefollowingareextractsfromthestatementoffinancialpositionofacompany:Theordinaryshareshaveanominalvalueof50centspershareandaretradingat$5·00pershare.Thepreferenceshareshaveanominalvalueof$1·00pershareandaretradingat80centspershare.Thebondshaveanominalvalueof$100andaretradingat$105perbond.Whatisthemarketvaluebasedgearingofthecompany,definedaspriorchargecapital/equity?

单选题Which of the following statements are correct? (1)A certificate of deposit is an example of a money market instrument (2)Money market deposits are short-term loans between organisations such as banks (3)Treasury bills are bought and sold on a discount basis

单选题A company has just paid an ordinary share dividend of 32·0 cents and is expected to pay a dividend of 33·6 cents in one year’s time. The company has a cost of equity of 13%. What is the market price of the company’s shares to the nearest cent on an ex dividend basis?

单选题Which of the following statements are correct? (1)The general level of interest rates is affected by investors’ desire for a real return (2)Market segmentation theory can explain kinks (discontinuities) in the yield curve (3)When interest rates are expected to fall, the yield curve could be sloping downwards

单选题Lane Co has in issue 3% convertible loan notes which are redeemable in five years time at their nominal value of $100 per loan note

单选题A company needs $150,000 each year for regular payments. Converting the company’s short-term investments into cash to meet these regular payments incurs a fixed cost of $400 per transaction. These short-term investments pay interest of 5% per year, while the company earns interest of only 1% per year on cash deposits. According to the Baumol Model, what is the optimum amount of short-term investments to convert into cash ineach transaction?

单选题Aninvestmentprojecthasacostof$12,000,payableatthestartofthefirstyearofoperation.Thepossiblefuturecashflowsarisingfromtheinvestmentprojecthavethefollowingpresentvaluesandassociatedprobabilities:Whatistheexpectedvalueofthenetpresentvalueoftheinvestmentproject?

单选题Which of the following is/are usually seen as forms of market failure where regulation may be a solution? 1 Imperfect competition 2 Social costs or externalities 3 Imperfect information

单选题TKQ Co has just paid a dividend of 21 cents per share and its share price one year ago was $3·10 per share. The total shareholder return for the year was 19.7% What is the current share price?

单选题Which of the following are financial intermediaries? (1)Venture capital organisation (2)Pension fund (3)Merchant bank

单选题Which of the following statements are correct? (1)Share option schemes always reward good performance by managers (2)Performance-related pay can encourage dysfunctional behaviour (3)Value for money as an objective in not-for-profit organisations requires the pursuit of economy, efficiency and effectiveness

单选题ThefollowingfinancialinformationrelatestoQKCo,whoseordinaryshareshaveanominalvalueof$0·50pershare:Onanhistoricbasis,whatisthenetassetvaluepershareofQKCo?