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a) You are provided with the following information relating to V ltd
Equity and liabilities
12% debentures (shs1000 at par) 16,000
10% preferences shares 6,250
Ordinary shares (Shs 10 par) 12,500
Retained earnings 28,125
Additional information
i. The debentures are currently selling at Shs 950 in the market
ii. Company paid a dividend of Shs 5.00 per ordinary share and they are expected to grow at a rate of 10% per annum.
iv. The corporation tax is 40%
Required
Effective Cost of debt (3 marks)
Cost of equity (3 marks)
Weighted Average cost of capital (4 marks)
The continuous compounding rate is 13,974% per year. The equivalent nominal rate, compounded quarterly, is
A company is considering an investment proposal to install new milling controls. The project will cost Kshs 50,000,000. The facility has a life expectancy of five years and no salvage value. The company’s tax rate is 40%. The estimated cash flows from the proposed investment proposal are as follows:
Year CF Kshs 000
1 13,000
2 14,000
3 18,000
4 23,000
5 25,000
Compute:
a. Accounting Rate of Return (2Marks)
b. Discounted payback period at 6% discounting factor (4 Marks)
c. Net present value at 15% discounting factor and advise management on the project’s feasibility ( 4 Marks)
Kagiso wants to buy a new gaming computer for R40 000.He decides to save by depositing an amount of R400 quarterly into an amount earning 16% intrest per year, compounded quarterly. Thr approximate number of quarter's it will take kagiso to have R40 000 available is?
Q2: Marres limited has the following demand and cost functions
Demand function: P=80-3Q, where P is the unit selling price and Q is quantity in thousands
Cost function: TC=Q2+20Q+100, where TC is total cost in Ksh 000000
Required:
Optimal price to maximize profit (3mks)
Maximum profit (2mks)
: a) Outline the various ways of dealing with uncertainity in cost volume profit analysis (4mks)
b) Vast company limited manufactures a single product Zoe.
The following standard cost apply in its business
Standard weight to produce one unit 12kgs
Standard price per kg sh 9
Standard hours to produce one unit 10
Standard rate per hour sh 4
Actual production and costs for one accounting period were as follows:
Material used 3770kgs
Material costs sh 35,815
Hours actually worked 2,755
Hours paid for 2,900
Wages paid sh 11,571
The actual output was 290 units
Required:
Calculate the relevant material and labour variances (6mks)
a) A sole trader fixes his prices to achieve a gross profit percentage on sales revenue of 40%. All his sales are
for cash. He suspects that one of his sales assistants is stealing cash from sales revenue.
His trading account for the month of June 20X3 is as follows:
$
Recorded sales revenue 181,600
Cost of sales 114,000
Gross profit 67,600
Assuming that the cost of sales figure is correct, how much cash could the sales assistant have taken? (3 marks)
b) The profit earned by a business in 20X7 was $72,500. The proprietor injected new capital of $8,000 during
the year and withdrew goods for his private use which had cost $2,200.
If net assets at the beginning of 20X7 were $101,700, what were the closing net assets? (3 marks)
c) Explain the uses of cash flow statements. (4 Marks)
d) Outline and explain the three types of capital reserves. (6 Marks)
e) Explain using examples the various categories of financial ratios. (4 Marks)
Puleng receives R1 500,00 from the bank now, that charges 10,5% simple discount per annum. She has to pay back the bank an amount of R1 893,75 in a few months' time. The number of months after which Puleng pays back the loan, rounded to one decimal place, is
a manufacture has 15 years, 8.5 percent mortgage for 100,000 birr on a building. payments are made monthly.
a. find the monthly payment
b. how much interest will be paid?
Suppose the production cost is R293 250 computing component cost is R1035 labour cost is R4140 and the savings on reuseable material is R1725,determine number of devices produced
#339914 on Dec 2023