A prize pays $16,000 each quarter for 4 years (16 payments)commencing in exactly 6 months’ time. If the appropriate discount rate is 9.7% p.a compounding quarterly, the value of the prize today is (round to nearest cent; don’t use $ sign or commas): [HINT: the annuity is deferred]

TASK 1:

Annual report is a comprehensive report providing useful financial and non-financial information to shareholders and interested parties. It contains company’s activities and financial performance for the financial year. Annual reports are prepared at the end of a fiscal year for external users to gain financial information about the inner workings of the company and what management plans to do in the future.

a)    Financial statements are the main component in an annual report that indicate financial information of a company. What are the main elements of a financial statement? Discuss the functions of each of the element of a financial statement.

(8)

b)    Auditor’s report is one of the elements in an annual report. Discuss the functions of the auditor’s report in an annual report.

(6)

c)    What other qualitative information that you will find in an annual report? Discuss the objectives of the qualitative information that you have identified.

(6)

(Total: 20 marks)

A fast growth share has the first dividend (t=1) of $2.41. Dividends are then expected to grow at a rate of 6 percent p.a. for a further 2 years. It then will settle to a constant-growth rate of 1.6 percent. . If the required rate of return is 16 percent, what is the current price of the share? (to the nearest cent)

Select one:

a. $17.95

b. $36.10

c. $16.74

d. $17.91

A company has its share currently selling at $18.70 and pays dividends annually. The company is expected to grow at a constant rate of 3 percent pa.. If the appropriate discount rate is 18 percent p.a., what is the expected dividend, a year from now (rounded to nearest cent)?

ABC Limited has a stable sales track record but does not expect to grow in the future. Its last annual dividend was $5.39. If the required rate of return on similar investments is 19 percent p.a., what is the current share price? (to the nearest cent; don't use the $ sign)

The constant-growth dividend model will provide invalid solutions when:

Select one:

A. the growth rate of the share exceeds the required rate of return for the share.

B. the growth rate of the share is less than the required rate of return for the share.

C. the growth rate of the share equals the dividend yield for the share.

D. None of the above

A company has just paid its first dividend of $4.86. Next year's dividend is forecast to grow by 6 percent, followed by another 6 per cent growth in year two. From year three onwards dividends are expected to grow by 3.6 percent per annum, indefinitely. Investors require a rate of return of 15 percent p.a. for investments of this type. The current price of the share is (round to nearest cent)

Select one:

a. $46.13

b. $42.00

c. $22.50

d. $24.47

Each quarter, a company pays a dividend on its perpetual preference share. Today, the share is selling at $16.89. If the required rate of return for such shares is 10.7 percent p.a. compounding quarterly, what is the quarterly dividend paid by this company? (to the nearest cent; don’t include $ sign)

Refinancing Decision Three years ago Max borrowed from a bank 60 000 euros for 5years to start its own company. The interest rate for the bank loan was 6% and the repayment schedule is based on monthly annuity payments. Now, after three years have passed, the interest rates have declined and its economic situation has improved ( e.g Interest rate margin declined). Max now has an opportunity to refinance the remaining loan balance with a 4% interest rate . However, there is a catch. The fee for refinancing is 400 euros ( paid immediately). a) Find the initial monthly loan payment b) Find the loan balance after three years c) Now find the new monthly payment if loan is refinanced with 4% d) should Max refinance ? (hint: compare the refinancing fee with present value of savings)

Annuity You are going to borrow money from the bank. But when considering your income, you could afford to spend maximum 4000 euros per year as total repayments . Now, If the loan interest rate is 8% , what would be the maximum loan amount which you can borrow from the bank If the loan has duration of 5 years and the annual loan payment are calculated on the basis of annuity? Find also , what are the second year loan Principal and interest payments.

What’s a firm’s market value? What are some factors driving a firm’s market value?

In 2018, Chevelle Company has sales of $39,500, cost of $18,400, and depreciation of

$1,900 and interest expense of $1,400. Its tax rate is 35%. It has a stock market value

of $250,000 and debt borrowing of $100,000. It has little cash on balance sheet and

pays a dividend of $3,470 in 2018.

a) Construct an income statement;

b) What’s the retained earnings?

c) What’s its EBITDA?

d) What’s its Enterprise Value (EV)?

e) What’s its EV /EBITDA valuation?

For EACH of the following company transactions, indicates whether the company in question should purchase forward contract, sell forward contract, purchase a call option, or purchase a put option, or none, to limit its exposure to exchange rate risk. Answers can be more than one.

a. A U.S. MNC, Independent Bank, will receive interest payments denominated in Colombian peso.

b. A U.S. MNC, Merged Co. will sell inventory software applications to Mexico denominated in Mexican peso.

c. A U.S. MNC, Bahamas Inc., will purchase Canadian papers and the contract is denominated in U.S. dollars.

d. A Singapore MNC, Tema Inc., may have projects in Thailand that need funds in Thailand Baht. The company is in the bidding process and the outcome is not known yet.

Chastain Corporation is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash conversion cycle. Chastain's 2016 sales (all on credit) were $185000; its cost of goods sold is 80% of sales; and it earned a net profit of 2%, or $3700. It turned over its inventory 4 times during the year, and its DSO was 37 days. The firm had fixed assets totaling $28000. Chastain's payables deferral period is 50 days. Assume 365 days in year for your calculations. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.

a. Calculate Chastain's cash conversion cycle. Round your answer to two decimal places. Do not round intermediate calculations.

c. Suppose Chastain's managers believe that the inventory turnover can be raised to 9.7 times. What would Chastain's cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 9.7 for 2016? Round your answers to two decimal places. Do not round intermediate calculations

Enumerate the steps of using dividend discount model to value stock?

Question 8
What are Swaps? Which are the main types of swaps involved in project finance?

Below is selected balance sheet and income statement information from Fuller Enterprises.

1. Compute the current ratio for each year and discuss any trend in liquidity.
2. Compute times interest earned, liabilities-to-equity, and cash from operations to total debt ratios for each year and discuss any trends for each.

NZ share market

-    Present an overview of the NZ share market. You may want to look at the size, turnover rate, major index, relative performance as compared to AU and US, market trend, etc;

-    Discuss how NZ share market help the real economy.

Question
There are various types of risk factors in financing an infrastructure project (in project finance context). List and discuss any 3 risk factors.