[farzain]

Profits that are lost by moving an input from one use to another are referred to as:

a. out-of-pocket costs.
b. cannibalization charges.
c. replacement costs.
d. opportunity costs.

[farzain]

MCq’s were tough for me, every answer seems to be true 😛

Overall paper went OK, did not write much in theoretical section 🙁

[farzain]

Initial Investment 1,800,000
Dep @ Y1 (450,000) 99,000 Tax Saving @ 22%
Balance 1,350,000
Dep @ Y2 (337,500) 74,250 Tax Saving @ 22%
Balance 1,012,500
Dep @ Y3 (253,125) 55,688 Tax Saving @ 22%
Balance 759,375
Scrap Value –
Balance Allowance 759,375 167,063 Tax Saving @ 22%

[farzain]

Dear Ajoke,

Suppose selling price is $ 10 and variable cost is $ 5 and the inflation rate is 5%

Sales at Y1 $ 10 x 1.1^1 = $ 11
Sales at Y2 $ 10 x 1.1^2 = $ 12.1
Sales at Y3 $ 10 x 1.1^3 = $ 13.31
Sales at Y4 $ 10 x 1.1^4 = $ 14.64

the symbol (^) is the power sign on the calculator, all inflation are carried in the same way

[farzain]

Dear John,

Please confirm the calculation will be as below for this question

Annuity factor for 7 years @ 10% = 4.868 + 1 (for payment at year 0)

Lease payment per year = $ 52,000/5.868 = $ 8,862

[farzain]

Dear John,

Please advice why we have used 5% holding cost and not 10% in this question ?

I agree in calculation the holding cost we divide it by 2 by I never come across where we have used half holding cost in calculation EOQ.

[farzain]

Dear Seanog91,

The formula to calculate the holding cost is = EOQ Units / 2 x holding cost per units

[farzain]

Dear Sonia,

For PLC

Share price at the start of the year 5.2 – 0.6 = 4.6
Growth during the year = 0.6/4.6 x 100 = 13%

Dividend Valuation method = .45(1+0.13)/5.2
so the shareholder return is 9.78%

Correct me if i am wrong Mr.John

[farzain]

Dear Sonia ,

for Question 1

Formula PE = 1 / (divi cover x divi yield)

PE = 1 / (3 x 0.04) = 8.33

Dear John please correct me if I am wrong.

[farzain]

Dear John,

Can you please provide working for 6,000 Units.

The EOQ is 13,416 right ?

[farzain]

Can you help me in below Mcq also

A machine cost $ 72,000 and has a maximum of 3 years. The running cost of each year are as follows:
Year 1 7,200
Year 2 9.600
Year 3 12,000
the estimated scrap value are as follows:
After Year 1 : 24,000
After Year 2 : 16,000
After Year 3 : 9.600

The cost of capital is 15%, calculate EAC if machine has to be replace after 2 years.

I got the answer of $ 72.972, can you please advise what I have missed.

[farzain]

Dear Mr.John,

Is there any list of formulas for such combine rations on opentuition ?

As I find it very difficult to combine the ratios according to the data provided in the question.

Or at least can you share the combine formula of Earning & Dividend Yield & Cover.

Many Thanks in advance for your precious time and help.

[farzain]

Many Thanks Mr.John

Can you please help me with below question also

X plc has a dividend yield of 8% and dividend cover of 2.4
What is the P/E ratio ?

Formula = P/E ratio x 1/Dividend Cover = Dividend Yield

How to use X plc question using this formula ?

[farzain]

Dear John,

Can you please provide the calculation of below question

R plc has in issue $400,000 8% bonds, redeemable in 5 years time at a premium of 10%.
Investors require a return of 12% p.a..The rate of corporation tax is 35%.What is the total market value of the debt in issue?

Many Thanks

[farzain]

Dear Sir,

I have searched the forum and found several question answer.

Many Thanks but unfortunately I was not able to find the answer for these, the questions are as below :

Question # 10
A project requires an investment of $ 24,000 at time 0, and generate an inflow of $ 5,000 per year for 8 years (with the first inflow incurring in one years time)
What is the IRR ?

Question # 12
The current spot take of US $ against the £ is $/£ 1.8420
Interest in the is 5% p.a, where as 4% in the UK
what would you expect the 3 month forward rate to be.

Question # 17
Why in time of growing demand it is beneficial for a company to have a high level of operational gearing ?

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