Other Economics Answers

Assessment 2.4

Cite two reasons why the commercial genre in Thailand has blossomed. Give a brief explanation for each. 

a) Frenzi Communications Inc. (FCI) has the following capital structure, which it considers to be optimal: debt = 25%, preferred stock = 15%, and common stock = 60%. FCI’s tax rate is 40%, and investors expect earnings and dividends to grow at a constant rate of 6% in the future. FCI paid a dividend of Gh₵3.70 per share last year (D0), and its stock currently sells at a price of Gh₵60 per share. Ten-year Treasury bonds yield 6%, the market risk premium is 5%, and FCI’s beta is 1.3. The following terms would apply to new security offerings. Preferred: New preferred could be sold to the public at a price of Gh₵100 per share, with a dividend of Gh₵9. Flotation costs of Gh₵5 per share would be incurred. Debt: Debt could be sold at an interest rate of 9%. Common: New common equity will be raised only by retaining earnings. i. Find the component costs of debt, preferred stock, and common stock. (9 marks) ii. What is the WACC? b) Identify and describe the phases of capital budgeting.

Examine how the concepts of agency theory can be used to explain the relationship that exists between the managers of a listed company and its shareholders. Your answer should include an explanation of the following : i. asymmetry of information; [5 marks] ii. agency costs; [5 marks] b) The primary financial objective of a business is stated by corporate finance theory to be maximising shareholder wealth as against profit maximisation, sales maximisation, and maximisation of benefit to employees and the local community. Provide a reasoned argument in support that wealth maximisation should be the main goal of the financial manager. [15 marks

Agyawadwo Ltd wants to raise equity capital for a new project. Upon some financial consultation with ABC financial advisors, they have learnt that right issues, retained earnings and private placement are very popular and important methods for raising equity capital but there is disagreement among management as to which method should be used. Required a) Discuss how these three methods compare broadly in terms of the amount that can be raised, the cost of issue, dilution of control, degree of under-pricing, and market perception? [13 marks] b) Examine any three factors that could influence a business for the choice of equity finance or debt finance. [12 marks]

LT India Ltd has the following capital structure, which it considers optimal: Debt 35% Equity shares 65% Total 100% Applicable tax rate for the company is 25%. Risk free rate of return is 6%, average equity market investment has expected rate of return of 12%. The company’s beta is 1.10. Debt will bear an interest rate of 9% p.a

Calculate a. component cost of debt and equity shares assuming that the company does not issue any additional equity shares.

b. Weighted Average Cost of Capital (WACC)

Kindly answer this as soon as possible.

Do a detailed sector analysis of Nestle Pakistan. IN TERMS OF FINANCE

REMEMBER THIS:

Industry analysis, for an entrepreneur or a company, is a method that helps to understand a company's position relative to other participants in the industry. 

An online shop delivers soap items within and outside Isabela. An initial shipping fee of P80.00 is collected for orders amounting to P500.00 or less, an extra charge of P40.00 for items with total value between P500.00 and P1000.00 and a double initial shipping for orders costing to P1000.00 and up. How much is the shipping fee if the total amount of orders is P1,350.00?

Explain the consumption function for a closed economy with a government sector (10)

2.2 Assuming a fall in the price of oil, use the AD-AS framework to explain the impact on prices, employment and income.

 Determine the new share price, EPS and price earnings ratio under both alternatives ( ie. Pay the dividend or repurchase the shares)