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?

案例分析题Hebac Co is preparing to launch a new product in a new market which is outside its current business operations. The company has undertaken market research and test marketing at a cost of $500,000, as a result of which it expects the new product to be successful. Hebac Co plans to charge a lower selling price initially and then increase the selling price on the assumption that the new product will establish itself in the new market. Forecast sales volumes, selling prices and variable costs are as follows: Selling price and variable cost are given here in current price terms before taking account of forecast selling price inflation of 4% per year and variable cost inflation of 5% per year. Incremental fixed costs of $500,000 per year in current price terms would arise as a result of producing the new product. Fixed cost inflation of 8% per year is expected. The initial investment cost of production equipment for the new product will be $2.5 million, payable at the start of the first year of operation. Production will cease at the end of four years because the new product is expected to have become obsolete due to new technology. The production equipment would have a scrap value at the end of four years of $125,000 in future value terms. Investment in working capital of $1.5 million will be required at the start of the first year of operation. Working capital inflation of 6% per year is expected and working capital will be recovered in full at the end of four years. Hebac Co pays corporation tax of 20% per year, with the tax liability being settled in the year in which it arises. The company can claim tax-allowable depreciation on a 25% reducing balance basis on the initial investment cost, adjusted in the final year of operation for a balancing allowance or charge. Hebac Co currently has a nominal after-tax weighted average cost of capital (WACC) of 12% and a real after-tax WACC of 8.5%. The company uses its current WACC as the discount rate for all investment projects. Required:

案例分析题Nesud Co has credit sales of $45 million per year and on average settles accounts with trade payables after 60 days