问答题1.YilandweYilandwe,whosecurrencyistheYilandweRand(YR),hasfacedextremelydifficulteconomicchallengesinthepast25yearsbecauseofsomequestionableeconomicpoliciesandpoliticaldecisionsmadebyitspreviousgovernments.AlthoughYilandwe’spopulationisgenerallypoor,itspeopleareneverthelesswell-educatedandambitious.Justoverthreeyearsago,anewgovernmenttookofficeandsincethenithasimposedanumberofstrictmonetaryandfiscalcontrols,includinganannualcorporationtaxrateof40%,inanattempttobringYilandweoutofitsdifficulties.Asaresult,theannualrateofinflationhasfallenrapidlyfromahighof65%toitscurrentlevelof33%.ThesestrictmonetaryandfiscalcontrolshavemadeYilandwe’sgovernmentpopularinthelargercitiesandtowns,butlesspopularintheruralareaswhichseemtohavesuffereddisproportionatelyfromthestrictmonetaryandfiscalcontrols.ItisexpectedthatYilandwe’sannualinflationratewillcontinuetofallinthecomingfewyearsasfollows:Yilandwe’sgovernmenthasdecidedtocontinuetheprogressmadesofar,byencouragingforeigndirectinvestmentintothecountry.Recently,governmentrepresentativesheldtradeshowsinternationallyandofferedbusinessesanumberofconcessions,including:(i)zerocorporationtaxpayableinthefirsttwoyearsofoperation;and(ii)anopportunitytocarryforwardtaxlossesandwritethemoffagainstfutureprofitsmadeafterthefirsttwoyears.ThegovernmentrepresentativesalsopromisedinternationalcompaniesinvestinginYilandweprimelocationsintownsandcitieswithgoodtransportlinks.ImoniCoImoniCo,alargelistedcompanybasedintheUSAwiththeUSdollar($)asitscurrency,manufactureshightechdiagnosticcomponentsformachinery,whichitexportsworldwide.Afterattendingoneofthetradeshows,ImoniCoisconsideringsettingupanassemblyplantinYilandwewherepartswouldbesentandassembledintoaspecifictypeofcomponent,whichiscurrentlybeingassembledintheUSA.Onceassembled,thecomponentwillbeexporteddirectlytocompaniesbasedintheEuropeanUnion(EU).TheseexportswillbeinvoicedinEuro(€).AssemblyplantinYilandwe:financialandotherdataprojectionsItisinitiallyassumedthattheprojectwilllastforfouryears.Thefour-yearprojectwillrequireinvestmentsofYR21,000millionforlandandbuildings,YR18,000millionformachineryandYR9,600millionforworkingcapitaltobemadeimmediately.TheworkingcapitalwillneedtobeincreasedannuallyatthestartofeachofthenextthreeyearsbyYilandwe’sinflationrateanditisassumedthatthiswillbereleasedattheendoftheproject’slife.Itcanbeassumedthattheassemblyplantcanbebuiltveryquicklyandproductionstartedalmostimmediately.Thisisbecausethebasicfacilitiesandinfrastructurearealreadyinplaceastheplantwillbebuiltonthepremisesandgroundsofaschool.Theschoolisideallylocated,nearthemainhighwayandrailwaylines.Asaresult,theschoolwillcloseandthechildrencurrentlystudyingtherewillberelocatedtootherschoolsinthecity.Thegovernmenthaskindlyagreedtoprovidefreebusestotakethechildrentotheseschoolsforaperiodofsixmonthstogiveparentstimetoarrangeappropriatetransportinthefuturefortheirchildren.Thecurrentsellingpriceofeachcomponentis€700andthispriceislikelytoincreasebytheaverageEUrateofinflationfromyear1onwards.Thenumberofcomponentsexpectedtobesoldeveryyearareasfollows:ThepartsneededtoassembleintothecomponentsinYilandwewillbesentfromtheUSAbyImoniCoatacostof$200percomponentunit,fromwhichImoniCowouldcurrentlyearnapre-taxcontributionof$40foreachcomponentunit.However,ImoniCofeelsthatitcannegotiatewithYilandwe’sgovernmentandincreasethetransferpriceto$280percomponentunit.ThevariablecostsrelatedtoassemblingthecomponentsinYilandwearecurrentlyYR15,960percomponentunit.ThecurrentannualfixedcostsoftheassemblyplantareYR4,600million.Allthesecosts,whereverincurred,areexpectedtoincreasebythatcountry’sannualinflationeveryyearfromyear1onwards.ImoniCopayscorporationtaxonprofitsatanannualrateof20%intheUSA.ThetaxinboththeUSAandYilandweispayableintheyearthatthetaxliabilityarises.AbilateraltaxtreatyexistsbetweenYilandweandtheUSA.Taxallowabledepreciationisavailableat25%peryearonthemachineryonastraight-linebasis.ImoniCowillexpectannualroyaltiesfromtheassemblyplanttobemadeeveryyear.Thenormalannualroyaltyfeeiscurrently$20million,butImoniCofeelsthatitcannegotiatethiswithYilandwe’sgovernmentandincreasetheroyaltyfeeby80%.Onceagreed,thisfeewillnotbesubjecttoanyinflationaryincreaseintheproject’sfour-yearperiod.IfImoniCodoesdecidetoinvestinanassemblyplantinYilandwe,itsexportsfromtheUSAtotheEUwillfallanditwillincurredundancycosts.Asaresult,ImoniCo’safter-taxcashflowswillreducebythefollowingamounts:ImoniConormallyusesitscostofcapitalof9%toassessnewprojects.However,thefinancedirectorsuggeststhatImoniCoshoulduseaprojectspecificdiscountrateof12%instead.Required:

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问答题(b)Comment on the impact of implementing TE's proposal and suggest possible actions Lamri may take as a result.(6 marks)

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案例分析题Tillinton Co Tillinton Co is a listed company which has traditionally manufactured childrens clothing and toys with long lives. Five years ago, it began manufacturing electronic toys and has since made significant investment in development and production facilities. The first electronic toys which Tillinton Co introduced into the market were received very well, partly as it was seen to be ahead of its competitors in making the most of the technology available. The country where Tillinton Co is listed has seen a significant general increase in share prices over the last three years, with companies in the electronic goods sector showing particularly rapid increases. Statement by Tillinton Cos chief executive Assume it is now September 20X3. Tillinton Cos annual report for the year ended 31 March 20X3 has just been published. Its chief executive commented when announcing the companys results: I am very pleased to report that revenue and gross profits have shown bigger increases than in 20X2, resulting in higher post-tax earnings and our company being able to maintain increases in dividends. The sustained increase in our share price clearly demonstrates how happy investors are with us. Our cutting-edge electronic toys continue to perform well and justify our sustained investment in them. Our results have also benefited from improvements in operational efficiencies for our older ranges and better working capital management. We are considering the development of further ranges of electronic toys for children, or developing other electronic products for adults. If necessary, we may consider scaling down or selling off our operations for some of our older products. Steph Slindon represents an institutional investor who holds shares in Tillinton Co. Steph is doubtful whether its share price will continue to increase, because she thinks that Tillinton Cos situation may not be as good as its chief executive suggests and because she believes that current share price levels generally may not be sustainable. Financial information Extracts from Tillinton Cos financial statements for the last three years and other information about it are given below. Tillinton Co statement of profit or loss in years ending 31 March (all amounts in $m) Tillinton Co statement of financial position in years ending 31 March (all amounts in $m) Other information Market price per $050 share (in $, $250 at Note: None of Tillinton Cos loan finance in 20X3 is repayable within one year. Required:

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案例分析题Arthuro Co group Arthuro Co is based in Hittyland and is listed on Hittylands stock exchange. Arthuro Co has one wholly-owned subsidiary, Bowerscots Co, based in the neighbouring country of Owlia. Hittyland and Owlia are in a currency union and the currency of both countries is the $. Arthuro Co purchased 100% of Bowerscots Cos share capital three years ago. Arthuro Co has the power under the acquisition to determine the level of dividend paid by Bowerscots Co. However, Arthuro Cos board decided to let Bowerscots Cos management team have some discretion when making investment decisions. Arthuro Cos board decided that it should receive dividends of 60% of Bowerscots Cos post-tax profits and has allowed Bowerscots Co to use its remaining retained earnings to fund investments chosen by its management. A bonus linked to Bowerscots Cos after-tax profits is a significant element of Bowerscots Cos managers remuneration. Bowerscots Co operates in a very competitive environment. Recently, a senior member of its management team has left to join a competitor. Arthuro Cos dividend policy Until three months ago, Arthuro Co had 90 million $2 equity shares in issue and $135 million 8% bonds. Three months ago it made a 1 for 3 rights issue. A number of shareholders did not take up their rights, but sold them on, so there have been changes in its shareholder base. Some shareholders expressed concern about dilution of their dividend income as a result of the rights issue. Therefore, Arthuro Cos board felt it had to promise, for the foreseeable future, at least to maintain the dividend of $074 per equity share, which it paid for the two years before the rights issue. Arthuro Cos board is nevertheless concerned about whether it will have sufficient funds available to fulfil its promise about the dividend. It has asked the finance director to forecast its dividend capacity based on assumptions about what will happen in a normal year. The finance director has made the following assumptions in the forecast: 1. Sales revenue can be assumed to be 4% greater than the most recent years of $520 million. 2. The operating profit margin can be assumed to be 20%. 3. Operating profit can be assumed to be reported after charging depreciation of $30 million and profit on disposal of non-current assets of $59 million. The cost of the non-current assets sold can be assumed to be $35 million and its accumulated depreciation to be $246 million. Depreciation is allowable for tax and the profit on disposal is fully chargeable to tax. 4. The net book value of non-current assets at the year end in the most recent accounts was $110 million. To maintain productive capacity, sufficient investment to increase this net book value figure 12 months later by 4% should be assumed, in line with the increase in sales. The calculation of investment required for the year should take into account the depreciation charged of $30 million, and net book value of the non-current assets disposed of during the year. 5. A $015 investment in working capital can be assumed for every $1 increase in sales revenue. 6. Bowerscots Cos pre-tax profits can be assumed to be $45 million. Arthuro Cos directors have decided that if there is a shortfall of dividend capacity, compared with the dividends required to maintain the current dividend level, the percentage of post-tax profits of Bowerscots Co paid as dividend should increase, if necessary up to 100%. Taxation Arthuro Co pays corporation tax at 30% and Bowerscots Co pays corporation tax at 20%. A withholding tax of 5% is deducted from any dividends remitted by Bowerscots Co. There is a bilateral tax treaty between Hittyland and Owlia. Corporation tax is payable by Arthuro Co on profits declared by Bowerscots Co, but Hittyland gives full credit for corporation tax already paid in Owlia. Hittyland gives no credit for withholding tax paid on dividends in Owlia. Required: