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1.     Identify and discuss the audit evidence that currently exists for sales in Flanco



a man deposit 2000 in a bank today at a rate of 4% per annum. after 2 years he deposit another 4,000 in five years, he wil withdraw 6000, how much money does he have on the 6th year


Exclusive Footwear Ltd experiencing profit declining in recent times...


1. Discuss which type of research approach is appropriate and why? [Hint: Consider formal, qualitative, quantitative, exploratory, explanatory, causal, descriptive researches].


2. In the light of the above research, suggest a list of variables (e.g. IV, DV, or MV), develop conceptual model, and discuss their nature and potential relation to each other with proper justification. Develop relevant hypothesis for the variables.


3. Discuss measurement concept in order to measure the above-mentioned variables and discuss how you should measure all the variables that you have identified. Need proper justification for your proposed measurement technique as well.


4. As the firms may have resource constraint, management is keen on knowing the most critical factors out of the list of factors that are discussed above so that they immediately can start addressing those areas. Hence, discuss how you can respond to this request of the management?


Choose a company listed on a stock exchange and obtain its latest annual report. You can find

the latest annual reports on company website. Focus on the ‘cashflow statement’ part of the

annual report. Based on the information given in the cashflow statement, answer the

following questions:

(a) What does the cashflow from operating activities section tell you about your firm?

(b) What does ‘cash from investing activities’ section indicate about the financial health of

your firm?

(c) Does your company rely on outsiders for its financing? If so, is the company following a

particular capital structure theory when deciding on its financing?

Your answer should not only cover the numerical details of the cashflow statement but should

also provide an in-depth discussion of your observations on various parts of the cashflow

statement.


Cummins India Ltd has the following capital structure, which it considers optimal:

Debt 25%

Preference Shares 10%

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. Following terms would apply to new securities being issued as follows:

1. New preference can be issued at a face value of Rs. 100 per share, dividend and cost of issuance will be Rs. 10 per share and Rs. 2 per share respectively.

2. Debt will bear an interest rate of 9%


Calculate

A) component cost of debt, preference shares and equity shares assuming that the company does not issue any additional equity shares. 

B) WACC.


Cummins India Ltd has the following capital structure, which it considers optimal:

Debt 25%

Preference Shares 10%

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. Following terms would apply to new securities being issued as follows:

1. New preference can be issued at a face value of Rs. 100 per share, dividend and cost of issuance will be Rs. 10 per share and Rs. 2 per share respectively.

2. Debt will bear an interest rate of 9%


Org Pvt. Ltd. is considering two mutually exclusive capital investments. The project’s expected net cash flows are as follows:

Expected Cash Flows Year Project A Project B

0 -400 -575

1 95 150

2 110 200

3 118 250

4 125 275

5 140 230

6 150 180 

a. If you were told that each project’s cost of capital was 10%, which project should be selected using the NPV criteria?

b. What is each project’s IRR?

c. What is the regular payback period for these two projects? d. What is the profitability index for each project if the cost of capital is 12%?


The management found suitable office to buy with a purchase cost of 

GHC1,000,000.00; however, 2 years ago, the company lost GHC150,000.00 on similar project which failed. 

The company wants to use needs refurbishment before occupation at a cost of GHC250, 000.00 and there will 

be annual rates and utility costs payable from year 1 of GHC70,000.00. The company will have static annual 

employee costs of GHC135,000.00 together with other identified fixed annual overheads of GHC100,000.00

per annum.

Ann Marketing Ltd expects to generate sales from 2 new customers each week in year 1 at an average invoice 

value of GHC5,000.00. The company’s business plan suggests that, the annual total revenue of year 1 will 

increase at 10% per annum from year 2 to 5 without any additional expenditure requirement.

The company has a cost of capital of 8% and a Return of Capital Employed (ROCE) of 15%. Assuming that, 

all cash movement will align with profitability.


Mc grath ltd issues a bond with a $1000 face value,10 years to maturity and annual coupon of $80.the yield to maturity is 8 % ,what price would the bond sell for? 


Nancy perkins borrow $2000 at 5% and she is going to make annual payments of $734.42.How long before nancy off the loan.


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