Finance & Financial Management E-Book

Andreas Keller

• Herausgeber: GRIN Verlag
• Sprache: Englisch

Veröffentlichungsjahr: 2011

Beschreibung

Seminar paper from the year 2003 in the subject Economics - Finance, grade: 1.2, University of Strathclyde, language: English, abstract: Managing Financial Resources Q1: Capital Expenditure Decisions – Dichem PLC Q2: Valuing Shares – Norbut Plc Q3: Rights Issues – Novelty Paints Plc Q4: Capital Structure Decisions – Gearless Plc

Leseprobe

Table of Content

1. Q1: Capital Expenditure Decisions - Dichem PLC

1.a Net Present Value (NPV) & key assumptions.

1.b Working Capital, Tax Implications & View of Finance Director.

1.b.i Treatment of Working Capital

1.b.ii Tax Implications of the Investment in Equipment.

2. Q2: Valuing Shares - Norbut Plc.

2.a Valuing Shares

2.a.i Earnings, Dividends and Investment based on McDougall’s Expectations

2.a.ii Value of Norbut Plc

2.a.iv Norbut Plc’s Price Earning Ratio at Zero Growth.

2.b Definition of the Price-Earnings Ratio (P/E) & Primary Determinant of a company’s P/E

3. Q3: Rights Issues - Novelty Paints Plc.

3.a Rights Issue

3.a.i Terms of Issue, Ex-Rights Price & Value of a Right

3.a.ii Exercise of Rights vs. Selling of Rights.

3.a.iv Fall in Share Price Anticipated.

3.b Rights Issue - Protects Shareholder’s Interest.

4. Q4: Capital Structure Decisions - Gearless Plc

4.a Debt & Equity Financing

4.a.i Calculate Earnings per Share (EPS)

4.a.ii Break-even Point - same EPS for Two Options.

4.b Primary Advantages & Disadvantages of using Long-term Debt for Funding

5. References.

Page 1

Finance & Financial Management

July 25 , 2003Deadline:

Andreas C. KellerStudent:

Page 3

MFR Assignment

1. Q1: Capital Expenditure Decisions-Dichem PLC

1.a Net Present Value (NPV) & key assumptions

Identification of parameters:

Expenditure/InvestmentsxxDevelopment of product £10.0 mln.

xxR&D test/product launch £1.0 mln.xxAdvertisement & marketing £0.50 mln.

ProductxxPrice/package £5.0xxProduct life cycle 5 years

SalesYear Mln. Packages Mln. Sales (price/pack. * Mln. packages)

1 2 3 4 5 4.0 £20.0

Overhead AllocationYear Sales revenue 20% of sales revenue Variable/Direct cost (CVC)£1.8/package

1 2 3 4 5 £20.0 £4.0 £7.2

Other items:xxInvestment in new equipment (C0) £16.0 mln.Student:Andreas C. KellerPage:3 of 28 25.07.2003

Registration No:200298123