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f9 question from opentutuin examination mock

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › f9 question from opentutuin examination mock

  • This topic has 7 replies, 3 voices, and was last updated 10 years ago by John Moffat.
Viewing 8 posts - 1 through 8 (of 8 total)
  • Author
    Posts
  • November 8, 2014 at 12:07 pm #208394
    Hadia
    Member
    • Topics: 2
    • Replies: 3
    • ☆

    PQR has demand 7500 units per month
    each unit cost $5 and are $100 per order and the inventory holding cost is 10% of purchase price per year
    there is a lead time of 30 days between placing and order and reciving delivery .if they order the eoq each time how frequently will they palce an order ( nearest dayz)

    November 8, 2014 at 6:11 pm #208457
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    For the EOQ formula, D = 7500 x12 = 90,000; Co = 100; Ch = 0.1 x £5 = 0.50.

    If you put these in the formula you get EOQ = 6,000.

    Since the are ordering 90,000 a year and 6,000 each time, then will order 90,000/6,000 = 15 times a year. With 365 days in a year, that means they will order every 365/15 = 24 days.

    November 9, 2014 at 7:39 pm #208687
    Hadia
    Member
    • Topics: 2
    • Replies: 3
    • ☆

    thank you sir and sorry for posting question three times..actually i didnt knw how to ask from tutuor…

    November 10, 2014 at 9:36 am #208756
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    You are welcome, and no problem 🙂

    November 15, 2014 at 9:57 am #210148
    Muzammil
    Member
    • Topics: 1
    • Replies: 3
    • ☆

    A company has sales of $200M per year.
    Currently customers take on average 40 days to pay.
    The company is considering offering a discount of 1% for payment within 15 days and expects that 60% of customers will take advantage of the discount.
    What is the effective annual cost of offering the discount?

    November 15, 2014 at 9:57 am #210149
    Muzammil
    Member
    • Topics: 1
    • Replies: 3
    • ☆

    A company has just paid dividend of $0.23 per share.
    Shareholders are expecting the dividend to remain at $0.23 per share next year, but to increase at an average rate of 3% per annum thereafter.
    Shareholder required rate of return is 12%, and the rate of cooperation tax is 25%.

    What will be the current market value per share (to the nearest cent)?

    November 15, 2014 at 1:18 pm #210207
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    Question 1:

    the discount is 1/99 = 0.0101 over a period of 25 days (40 – 15)

    So the effective annual cost = (1.0101)^(365/25) – 1 = 0.1580 (or 15.80%)

    November 15, 2014 at 1:21 pm #210208
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    Question 2:

    If the dividend was growing immediately then the answer (using the dividend growth formula) would indeed have been 2.63.

    However, growth does not start until a year from now, and so 2.63 is the value in 1 years time.

    So then we have to use the basic rule that the market value is the present value of expected receipts discounted at the required return.
    The value in 1 years time is 2.63, plus the expected dividend of 0.23 in 1 year gives a total in 1 years time of 2.86. Discount this for 1 year at the required return of 12% and you will get $2.56.

    (This has been a common ‘trick’ of the examiner in recent exams.)

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