APC308 Financial Management
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Description
The assignment covers all module learning outcomes.
Word count –
Question 1 1000 words
Question 2 1000 words
Question 3 1250 words
There is a total allowance of 10% +/- on the total word count for each question.
Select and attempt any TWO from the following three questions. Each question that is attempted will carry a maximum mark of 50%.
Question 1
1. Discuss the factors that influence the financing decision, differentiating between the different types of finance and the purposes of having the different types. (25 Marks)
2. You are given the following information about Baby PLC:
Financial Position Statement at January 20X0
£000 £000
Non-Current Assets 1,621
Current Assets 594
2,215
Equity Finance:
Ordinary Shares (25p) 300
Reserves 180 480
Non-Current Liabilities:
8% Preference Shares 360
10% Bonds (Redeemable after 6 years) 400
5% Bank Loans 840 1,600
Current Liabilities 135
Total Liabilities 2,215
You are also given the following information:
Yield on Treasury Bills 6%
Baby PLC Equity Beta 1.30
Equity Risk Premium 8.4%
Current ex-div ordinary share price £2.46
Current ex-div preference share price £0.72
Current ex-interest bond price £108
Corporate tax rate 30%
1. Required: Calculate the company’s WACC using market weightings. (18 marks)
2. What are the issues with using Weighted Average Cost of Capital (7 marks)
TOTAL (50 marks)
Question 2
Billy Ltd has provided the following figures for two investment projects, only one of which may be chosen.
Project X Project Y
£ £
Initial outlay 90,000 80,000
Profit for year 1 30,000 15,000
2 30,000 15,000
3 35,000 30,000
4 15,000 40,000
Estimated resale value at end of year 4 30,000 20,000
Profit is calculated after deducting straight line depreciation. The business has a cost of capital of 10%.
Please contact Professor Robert for a sample/customized paper of this or any other assignment.
Email: professorrobertphd@gmail.com