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q effect of additional debt finance on financial positiondebt finance of 3middot2m would raise gearing on a book value basis from 54 to 203 1167
bfd co has occurrence rapid growth in turnover since its formation three years ago but it has been unable to maintain net profit margin which has
q what is taxation and capital allowancesthe suppositions made regarding taxation should be investigated the tax rate has-been supposed to be
q define constant working capitalthe supposition of constant working capital should be investigated net working capital is probable to increase in
q what do you mean by inflationpredicts of future inflation of sales prices and variable costs should be prepared therefore that a nominal npv
arg co presently has 50m of fixed assets and long-term debt of 10m the issue of 3m of 9 debentures will raise fixed assets by 2m of buildings and
q evaluation of net working capitalthe evaluation presumes that several key variables will remain constant such as the inflation rates discount rate
q evlaute expected value of sales volume17500 times 0middot3 20000 times 0middot6 22500 times 0middot1 19500 unitsexpected npv 19500 times
q example on investment appraisal method contribution per unit 3middot00 - 1middot65 1middot35 per unittotal annual contribution 20000 times
q show the investment appraisal methodthe investment appraisal method is concerned with assessing the value of future cash flows compared to the cost
q what is primary financial purposethe primary financial purpose of a company is typically stated to be the maximisation of shareholder wealth and
q design a organisational strategythe objectives to which organisational approach relates depend on the relative power of different stakeholders
general limitations of net present value when applied to investment appraisalnpv is a generally used technique employed in investment appraisal but
q average cost of capitaleven though the director suggests that equity finance is appropriate given the amount of finance needed the amount alone
q define risk-adjusted discount ratesone technique in this heading is the assignment of investment projects to one of a set of risk classes all of
probability analysisthis engrosses the assessment of the probabilities of future events linked to an investment project if these events are universal
q sensitivity analysis of projectthis system measures the change in project npv arising from a fixed change in each project variable or measures the
in assessing project risk it is significant to be clear about the meaning of risk from an academic perspective risk demotes to a set of circumstances
q calculation of internal rate of returnthe company is accurate in its belief that npv measures the potential increase in company value of an
both irr and roce tenders a relative measure of return in percentage terms a feature that is seen as attractive to managers who may perhaps have
q define return on capital employedreturn on capital employed roce is as well called accounting rate of return distinctly irr roce uses average
q show example of internal rate of returnirr internal rate of return is a discounted cash flow investment appraisal method that calculates the
funding the investment by an issue of ordinary shares could tender several advantages to springbank plc gearing would drop to 47 3middot57middot4
any non-quantifiable factors you feel might influence the decision to accept the proposalnet present value methods are merely assessments of factors
choice of an appropriate discount ratethe difficulty with selecting a discount rate rests on whether the correct rate for the riskreturn has been