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Q.1 . ABC Plc current Ex divided share price is £ 3.08 or and the company has announced a dividend of 14p. At what rate do the investor expects its dividend to grow in the future. If the current share price is thought to be a fair one and if the investor required a rate of return of return of 15%.
Q.2. ABC Plc has issued 10 million share with a current market price of £4.0 per share. ABC plc plans to raise £9 million from a right issue at a 25% discount to the current market price. Which of the following is nearest to the theoretical ex rights price per share.
Q.3. A proposed investment has the following characteristics.
Initial investment £800000 Expected scrap value : Nil
Net Annual Pre tax cash flow £140000 Corporation tax rate : 30%
Expected life of investment 10 Years Discount rate: 10%
Capital Allowances straight line basis over the life of the projectWhat is the after tax Net Present Value of the project? Round your answer to nearest hundred pounds and assume tax is paid in the year that profit arise.
There is no point in typing out full questions and expecting me to provide you with full answers!
You must have answers in the same book in which you found the questions, and so ask about whatever it is that you are not clear about and then I will explain.
If you do not have answers because you have been given them as test questions, then we certainly do not do your homework for you :-). If you type out your answers then I will tell you whether they are correct or not.
Everything needed to be able to answer all three questions is explained in my free lectures. The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
Could you check these answers because these practice questions that if they are correct
My answer
Q.1 10.5%
Q.2 .3.77
Q.3. 50300Q1 is wrong – the answer is 10%
Q2 is correct
Q3 is correct, except that the NPV is negative.
A project has the following cash flows and a payback period of 3.5 years.
Year 0 1 2 3 4 5
Cash Flows (420) 50 100 200 800What is the missing cash flow for year 4?
My answer is 140. is it correct.
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