BUSF_A01.qxd

Appendix 4 • Suggested answers to selected problem questions 5.4 Livelong Ltd Calculation of present cost of operating the machi ...

Suggested answers to selected problem questions Tax on incremental cash flows Total incremental cost (excluding depreciation) =£ ...

Appendix 4 • Suggested answers to selected problem questions lLevel of competition in the market. lThe contract size, relative t ...

Suggested answers to selected problem questions where Dis annual demand (in units), Sis the selling price per unit, Vis the vari ...

Appendix 4 • Suggested answers to selected problem questions Table of sensitivities Factor Original estimate Break-even point Di ...

Suggested answers to selected problem questions 20X2 (8,000 ×0.6 ×0.3) +(10,000 ×0.6 ×0.7) +(12,000 ×0.4 ×0.5) +(15,000 ×0.4 ×0. ...

Appendix 4 • Suggested answers to selected problem questions Working capital 20X1 20X2 20X3 £ 000 £ 000 £ 000 Tracker sales reve ...

Suggested answers to selected problem questions 8.1 The reasons for the relative popularity of convertible loan notes include th ...

Appendix 4 • Suggested answers to selected problem questions market price of a security at any given moment reflects a consensus ...

Suggested answers to selected problem questions 10.5 Da Silva plc (a) Year Growth 2 (0.0900 −0.0800)/0.0800 =0.125 3 (0.1050 −0. ...

Appendix 4 • Suggested answers to selected problem questions The share price would be identical (£2.40) because the lower risk a ...

Suggested answers to selected problem questions (a) Personal borrowing Lee’s dividend after the issue (12,500 ×£0.304) £3,800 Le ...

Appendix 4 • Suggested answers to selected problem questions shareholders can employ the cash more effectively than the business ...

Suggested answers to selected problem questions l Informational effect of dividends. It is argued by some people that businesses ...

Appendix 4 • Suggested answers to selected problem questions 13.5 North Anglia Engineering Ltd (a) Optimum level of inventories ...

Suggested answers to selected problem questions Pre-takeover price per share of Relaxation plc EPS [11/(90 ×2)] 0.0611 Price per ...

Appendix 4 • Suggested answers to selected problem questions 16.1 Tiny Tim Ltd and Mega plc Price/earnings ratio = or: Market pr ...

Suggested answers to selected problem questions There are many problems with these valuations, for example: l The first two meth ...

Glossary Capital allowances The equivalent to depreciation that is allowed by the UK tax authorities in comput- ing the taxable ...

Glossary Coupon rate The rate of interest, based on the nom- inal or par value, that an organisation is contracted to pay on its ...