Jupiter ltd is considering an investment in a licence

Assignment Help Accounting Basics
Reference no: EM131018951

1. Jupiter Ltd is considering an investment in a licence to market a new brand of yoga mats for two years. The cost of the licence is $100,000. You estimate that the licence could generate $55,000 per year of the licence. The cost of capital is estimated to be 15% per annum.Is the project financially viable according to the Profitability Index?Answer: True or False

2. Ajax Ltd, in 2012, reported an amount of $45m in Accounts Receivable, which was up from $39m in the previous year. Inventories were also up on the previous year, being $25m in 2012 as compared with $21m in 2011. This investment in working capital was partly funded by an increase in Accounts Payable, which was $26m in 2012, as compared with $25m in 2011.Calculate the increase in Net Working Capital in 2012.(Show an increase in Net Working Capital as a positive amount and show your answer in million dollars, eg $999)

Answer:UnitNumber

3. The most accurate measure of the cost of a company's debt is:Choose one answer.

A.The yield to maturity of the company's market traded debt.
B.The company's interest expense.
C.The coupon rate of the company's market traded debt.
D.The yield of an Australian government 10-year bond.

4. Drillpoint Ltd is considering an investment in an oil field, which it estimates will generate $2m in royalties each year over a ten year period. The investment will cost $7m.
Calculate the pay back period.
Show your answer in years to one decimal place, eg. 9.9
Answer:
Unit
Number

5. Mercury Ltd has $456m in debt, which has a yield to maturity (IRR) of 8.5%. The company also has shareholders funds of $1,145m and you estimate the cost of equity to be 11.3%. The corporate tax rate is 30%.
Adjusting for the fact that interest expenses are tax deductible, calculate the Weighted Average Cost of Capital of Mercury Ltd.
(Show your answer as a percentage to one decimal place, eg 99.9%)
Answer:
Number
Unit

6. Ajax Ltd reported Net Income of $435m in 2013, after providing for $186m in tax at a rate of 30%. Interest Expense was $56m and Depreciation was $32m. The increase in working capital required to generate that Net Income in 2013 was $23m and the firm also invested $53m in new property, plant and equipment during the year.
Calculate the free cash flow generated by Ajax Ltd in 2013.
(Show your answer in million dollars to one decimal place, eg $999.9)
Answer:
Unit
Number

Reference no: EM131018951

Questions Cloud

Which if any of the obstacles to moral behavior : Read again the account of BF Goodrich, Lawson and Vandivier. Which if any of the obstacles to moral behavior do you see operating in the BF Goodrich situation?
How should the business financing be recorded on the books : How should the business financing be recorded on the books of the company? What critical errors do you see in the initial planning phase of our company?
What would be the total amount of assets : What would be the total amount of assets (related to the note receivable) reported on Miles balance sheet dated December 31, 2014? (Points : 2) $4,000 $4,133 $4,320 $4,187
A company is considering investing in some new equipment : A company is considering investing in some new equipment. The new equipment will deliver cost savings of $100,000 in the first year and $130,000 in the second year, before being sold for $56,000 at the end of the second year.
Jupiter ltd is considering an investment in a licence : The most accurate measure of the cost of a company's debt is:Choose one answer.A.The yield to maturity of the company's market traded debt.B.The company's interest expense.C.The coupon rate of the company's market traded debt.D.The yield of an Austra..
Draw the production possibilities frontiers : Draw the production possibilities frontiers (PPFs) for Australia and Belgium with cars on the horizontal axis and sweaters on the vertical axis.
What is the average total cost for the representative firm : What is the average total cost for the representative firm? In the long run, how many units will this firm produce and what price will it sell each unit for in this market
What is its thermal resistance : A particular transistor has a power rating at 25°C of 10 W, and a maximum junction temperature of 150°C. What is its thermal resistance? What is its power rating when operated at an ambient temperature of 50°C? What is its junction temperature whe..
What is the corresponding device power rating : A particular transistor having a thermal resistance Θja = 2.5°C/W is operating at an ambient temperature of 30°C with a collector-emitter voltage of 20 V. If long life requires a maximum junction temperature of 130°C, what is the corresponding dev..

Reviews

Write a Review

 

Accounting Basics Questions & Answers

  Prepare new income statements for firms

Prepare new income statements for the firms assuming each sells one unit less (i.e. each firm sells 9 units)

  A single stage window at the post office experiences an

a single stage window at the post office experiences an average arrival rate of 14 people per hour and can service on

  Working capital often increases as the result of higher

consider the following statements about the investment in working capital in a capital budgeting analysisi. working

  Mammoth company purchased packaging equipment on january 3

mammoth company purchased packaging equipment on january 3 2008 for 67500. the equipment was expected to have a useful

  Discuss briefly the accounting irregularities found

Discuss briefly the accounting irregularities found in ENRON and HIH's corporate collapse. Also discuss, the role auditors played and how they could have helped to avoid these collapses.

  What would jds report if the plan assets

What, if any, pension liability must be reported in the balance sheet? What would JDS report if the plan assets were $45 million instead?

  Finding future employment

How can participating in groups help you in not only succeeding in your current job but help you in finding future employment?

  Loon taxable income for the year

Assume the same facts except that Loon's long-term capital gain is $100,000 (instead of $60,000). Compute Loon's taxable income for the year.

  What is the effective cost of borrowing in this case assume

your firm has an average collection period of 42 days. current practice is to factor all receivables immediately at a 2

  Convertible preferred stock 2500 shares of 85 50 par

mcwade company has 36000 shares of common stock outstanding at the beginning of 2014. mcwade issued 4500 additional

  Utech company bottles and distributes livit a diet soft

utech company bottles and distributes livit a diet soft drink. the beverage is sold for 50 cents per 16-ounce bottle to

  Discuss why using an activity-based system could provide

as a result management is considering moving from a direct-labor based overhead rate to an activity-based costing

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd