[Kiing]

[Morning sitting]
Here’s what I got:
Section C
Q1
(a) To calculate operating gearing ratio and comment the view of external finance providers regarding the operating gearing.
(b) To calculate debt/equity ratio and interest cover ratio and comment the view of external finance providers regarding the financial gearing.
(c) (I can’t remember this) It is like… “What will happen if the real term cost of capital is used?”
(d) Problems SMEs faced in obtaining finance for business expansion.

Q2
(a) NPV calculation
The investment project included two initial investment components, hotel and fittings, and two revenue component, accomodation and restaurant. Percentage of occupancy, total day and daily room rate needed to be considered. Cost of capital needed to be converted to nominal term.
(b) To discuss why directors pay less dividend and why shareholders are not happy with lower dividend.
(c) Simulation analysis and its benefits

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