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Hi All,
I had that question on NPV, the company wants to introduce a new product and will invest 100mln. The WACC was 12% and inflation 5%, how did you handle that? Did you incorporate both? I calculated it seperately as I was unsure. Also, forgot to add back depreciation. I think there were also yearly injections of working capital.
Any other questions you remember? The ones I remember: critically evaluate probability analysis in capital appriasal and a question on family business trying to lend money from the bank (operational gearing ratio, interest cover ratio + plus two essay questions). I think that the business was not highly indebted and could expect to get money from the bank.
Any thoughts?
What about Question 1 (how much investment should decrease? I got 10 mln to decrease.
Part – C – Two main factors – what did you write?
What about revaluation surplus, was it 7800 * 30% + 10 000 * 30% (given per qustion) = Total revaluation surplus, right?
@graf said:
Diluted EPSearnings + notional earnings / shares plus notional shares
notional earnings = 2400-480= 1920
(40000*6%) = 2400 this is saved if loan is converted (because no need to pay 6% )
less tax on that saving (2400*20%) = 480notional shares i also calculated but do not remember the number
Graf, but the profit given in the question is before paying any interest,so deducting the interest of the loan notes proceeds would be wrong, no? Was it 30 000 before any interest and tax charges?
What about depreciation question in Q31? I think I got Carrying amount of 32 000 for leased property and 8000 was the revaluation? It should have been split 6/12 pre-revaluation depreciation and 6/12 post revaluation depreciation, is that right? Anyone remembers that ?
In Q31 I have deducted the whole amount of stolen receivables from the Trade Receivables, was that correct?
How did you calculate depreciation for the proprety under lease ? was it October to March 6/12 + 6/12 post depreciation?
How did you show Loan notes in SPF at 40 000 as per face value?
The Dilluted EPS had to include potential loan notes, the
30000 (PBIT)/ 50 000 (Shares as per q) + 8 000 (from loan notes) ? did you get this?
Thanks for comments!
Yes, thank you!
As I have understood, the start point for amortizing is the start of production process (not earlier), but before the production has started we keep capitalizing (as long as owners believe in project`s viability).
Arthur
Hello Mike,
Would you be so kind to tell me, why in the statement ended on September we include amortisatization for only 3 months? As I understand we have 80 000 to be expensed, then, when the owners became confident that the project is a success, we are going to capitalise all the following development expenses, so we have March to September (which gives [160 000 / 5 * 7/12].
If I am wrong and we start to include amortization only after the project is done, then what happens in the period between March and June? As far as I know we are allowed to capitalize and amortize development expenses after we get enough evidence we will make a use of it in the future. Thank you in advance for your reply!
Arthur