BUSF_A01.qxd

Appendix 3 Suggested answers to review questions 1.4 Preference shares are part of the equity or ownership of the business, usua ...

Appendix 4 Suggested answers to selected problem questions Thus there is nothing inconsistent between reasonable treatment of cu ...

Appendix 3• Suggested answers to review questions lLong-term finance.The relationship between equity capital and fixed return ca ...

Suggested answers to review questions maximise the return on investment. Since this coincides, in most cases, with those project ...

Appendix 3• Suggested answers to review questions 6.1 The two main limitations are: lIt assumes that only one of the variables w ...

Suggested answers to review questions 7.3 There is no other portfolio that will give a higher expected return for that portfolio ...

Appendix 3• Suggested answers to review questions Factors that affect the value of convertible loan notes include: lthe prevaili ...

Suggested answers to review questions 10.3The level of capital gearing is such an important factor for businesses that it seems ...

Appendix 3• Suggested answers to review questions 12.2All investments that yield a positive NPV, when discounted at the sharehol ...

Suggested answers to review questions 13.6The advantages of using a bank overdraft include: lIt is relatively cheap. lIt is flex ...

Appendix 3• Suggested answers to review questions linternational Fisher effect; and linterest rate parity. 15.4The fact that gov ...

Suggested answers to review questions existing shareholder or to an outsider acceptable to the other shareholders. This means th ...

Suggested answers to selected problem questions (Answers to the remaining problems are to be found in the Solutions Manual that ...

Suggested answers to selected problem questions The downturn in gross profit margin must have been caused by an increase in the ...

Appendix 4 • Suggested answers to selected problem questions Return on capital employed ×100% ×100% 20.0% 4,618 ×100% 27.8% 16,6 ...

Suggested answers to selected problem questions Return on ordinary shareholders’ funds ×100% ×100% 18.2% ×100% 32.5% Gross profi ...

Appendix 4 • Suggested answers to selected problem questions General comments This business has experienced a major expansion in ...

Suggested answers to selected problem questions 4.1 Barclay plc Year Cash flow Factor Present value £m £m 0 (10) 1/(1 +0.15)^0 ( ...

Appendix 4 • Suggested answers to selected problem questions The IRR of Machine A lies below 20 per cent, but above 10 per cent. ...

Suggested answers to selected problem questions Workings Annual material cash flows £ 20X4 First 500 units £380 − 120 =£260/unit ...