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How about the market value of debt mcq. The nominal was 100. 5/100 interest and redeemed at par plus 10 percent premium. Tax was 20%
Did anyone deduct tax from interest?
What was ure MV?For the EPS, did u increase the pbit? It said that with either source of finance, the 2m expansion would result in an increase in PBIT by 20 % my new Pbit in both cases was 1916.4.
(1597/100 x 120)I used that as a starting figure for both debt n equity funded expansion.
Then with equity i recalculated PAT, keeping the interest of 315 as same and applying 22 % on PBT. Then calculated PAT. EPS = revised PAT / 3000 shares
For debt I took 1916.4 as PBIT, subtracted interest of 475 (315 plus 160) calculated new PAT and divided on existing shares (2500) to arrive at the new EPS.
got a better EPS with debt. But debt/equity ratio messed up so in analysis part I wrote to choose equity as it results in a reasonable debt/equity ratio.
Yeh I think with money market hedge the cost was 1907 something. And with the forward rate for shillings I thinku had to use interest rate parity. I used the deposit rates for shilling and dollar and Exponented the fraction on 0.25 power for 3 months. I got 14.11 as fwd rate. Anyone else got these answers?
Any one knows what rates to use for interest rate parity? Deposit or borrow?So in a nutshell, UK exporter invoicing in pounds and pound strengthens against euro would give rise to:
-the European customer paying more to the U.K. Supplier
-the goods costing more to the the European customer hence becoming expensive in the European market as opposed to being purchased from a local supplier
-the sales volume of a competing European Supplier (dealing in same goods being imported from U.K.) taking a hike while the sales volume of the U.K. Exporter suffering a lossA U.K. Importer paying in euros and the pound strengthens would mean:
-the goods costing lesser to the U.K. Customer
-the goods cost less so would become cheaper in the U.K. Market as opposed to being purchased from a Local UK supplier
-the sales volume of competing local UK suppliers suffering and the sales of European exporters taking a boastThis kind of means that if a country’s currency strengthens, the exporters would suffer? And if it weakens the exporters would benefit?
Please confirm my understanding.
Thank youAlso, later in the article, it says goods imported from Europe (considering same scenario where the euro has weakened against pound) will be more competitive in the UK market.
Again, this can only be the case if the UK importer bears exchange risk (pays in Euros) as he will now purchase euros at a more favourable rate. Which brings me again to the question of Party bearing the risk. The article seems to suggest that it’s always the buyer.
Please confirm my understanding.
Really need to understand this.17 was audit Risk and 16 was control deficiency. In the 17th question the finance director kept assuming so much like the payable days wud decrease, allowance for receivable be reduced etc. what did u guys write fr that?
Btw how come this thread isn’t as active? By this time after the paper people had posted a gazillion comments. Wonder wut happened!
Hello,
There were two substantive questions. One for provision, one for receivables. Right?Thank u. I had been hitting my head trying to rmr marks allocation.
What did you do for last question part 2? I didn’t use ratios for Risk identification. Just regular data in the question.Cuz there were so many risks without the useage of ratios and cudnt think too much abt ratios cuz of tym pressure.
The question said “using ratios and other data, identify risks”. do u think I’d loose marks for not referring to ratios calculated in part a