The initial cost times the capital allowance rate gives the

 英國dissertation網(wǎng)英國澳洲美國新西蘭代寫留學生Finance and Accounting,Term Paper,dissertation代寫,財務管理dissertation代寫,留學生會計dissertation代寫.. 

Task1(I)（a）Investment A

 Year 0
 -£33,000
 
Year 1
 £20,000
 
Year 2
 £20,000 +£2,887.5 (tax savings due to capital allowance)
 
Year 3
 £11,000 + £1,876.875 (tax savings due to capital allowance)
 
Year 4
 £11,000 + £3,485.625 (tax savings due to capital allowance)
 

For Year 2Accounting The initial cost times the capital allowance rate gives the capital allowance:

£33,000 x 0.35 = £11,550

Tax rate is 25%, so tax savings is:

£11,550 x 0.25 = £2,887.5

For Year 3

Capital allowance:

(£33,000- £11,550) x 0.35 = £7,507.5

Tax rate is 25%, so tax savings is:

£7,507.5 x 0.25 = £1,876.875

For Year 4

Capital allowance:

£33,000- £11,550- £7507.5 = £13,942.5

Tax rate is 25%, so tax savings is:

£13,942.5 x 0.25 =£3,485.625

NPV for option A is £19,423.22

 Investment B

 Year 0
 -£30,000
 
Year 1
 £12,000
 
Year 2
 £10,000 + £2,625 (tax savings due to capital allowance)
 
Year 3
 £20,000+£1,701.875 (tax savings due to capital allowance)
 
Year 4
 £20,000+£3,160.625 (tax savings due to capital allowance)
 For Year 2

The initial cost times the capital allowance rate gives the capital allowance:

£30,000 x 0.35 = £10,500

Tax rate is 25%, so tax savings is:

£10,500 x 0.25 = £2,625

For Year 3

Capital allowance:

(£30,000- £10,550) x 0.35 = £6,807.5

Tax rate is 25%, so tax savings is:

£6,807.5 x 0.25 = £1,701.875

For Year 4

Capital allowance:

£30,000- £10,550-£6,807.5 = £12,642.5

Tax rate is 25%, so tax savings is:

£12,642.5x 0.25 =£3,160.625

NPV for option B is £18,602.71

 Comparing Option A and B, Option A should be selected for its higher NPV.

 （b）（i）If A plc is a highly geared organization, then it should not raised the capital needed from external sources. This is because a heavily geared company has to pay huge amount of money regularly, which holds back the company’s profitability and growth. Thus, the company should turn to equity financing and build and maintain its cash base. For instance, it can further sell its shares to its existing shareholders at a competitive discounted price.#p#分頁標題#e#

 （ii）If A plc is a low geared organization, then it can have various financing options, such as bank loan, equity, debt and leasing. Leas financing is particularly useful way because it allows the company not tie its capital in the fixed assets and if structured properly, it generates some tax benefits to the company.

 （c）Same measuring technique and procedure as used in the previous approval process should be adopted in the post audit period to keep the process constant and maintain the accuracy needed. In addition, the company should require its purchasing and operating departments provide monthly report of this investment, so that it can have a regular review of this investment which is very important for the improvement of the annual cash inflow.

  英國dissertation網(wǎng)英國澳洲美國新西蘭代寫留學生Finance and Accounting,Term Paper,dissertation代寫,財務管理dissertation代寫,留學生會計dissertation代寫When Investment A has an initial cash outflow of 3% above budget and the annual cash inflow 5% under budget

 Year 0
 -£33,990
 
Year 1
 £19,000
 
Year 2
 £21,974.125
 
Year 3
 £13,319.431
 
Year 4
 £13,103.944
 

For Year 2

The initial cost times the capital allowance rate gives the capital allowance:

£33,990 x 0.35 = £11,896.5

Tax rate is 25%, so tax savings is:

£11,896.5 x 0.25 = £2,974.125

For Year 3

Capital allowance:

(£33,990- £11,896.5) x 0.35 = £11,477.725

Tax rate is 25%, so tax savings is:

£11,477.725 x 0.25 = £2,869.431

For Year 4

Capital allowance:

£33,990- £11,896.5- £11,477.725 = £10,615.775

Tax rate is 25%, so tax savings is:

£10,615.775 x 0.25 =£2,653.944

NPV for option A is £14,327.95

 （II）（a）

When making strategic decisions on investment, Prince Wales Hospital should use discounted cash flow analysis to take the time value of money into account. There are several techniques which address the time value of time that we can adopt when making financial decisions (Gallagher, 2003). These basic tools include calculating payback period, internal return rate, and profitability index. 

 （b）

Cost= $50,000+$372,890=$422,890

Depreciation= Cost/number of years=$84,578

During the 5-year useful life, the annual cash inflows:

NCF= △R +△O +Dep. +△NWC

=$80,000+$20,000+$84,578- ($110,000-$100,000) =$174,578

 Years of Payback= Cost of project/annual NCF = $422,890/$174,578=2.422356#p#分頁標題#e#

 NPV=$174,578×(P/A, IRR, 5)－$422,890

When NPV=0 　Then (P/A, IRR, 5)=2.422   So IRR=30%

 Return of the investment= (Investment Gains - Investment Cost)/ Investment Cost

= ($100,000*5- $422,890)/$422,890=18.23%

Task2

(a)

1)        Gross profit margin = (Gross profit / Sales) x 100%

2)        Net profit margin= (Profit after tax /Sales) x 100%

3)        Return on equity = (Profit after tax/ Total Equity) x 100%

4)        Return on assets = (Profit before interest and tax/ Total assets) x 100%

5)        Interest cover = Profit before interest and tax / Interest payable for year

6)        Debt ratio=Total Debts/ Total assets

7)        current ratio= Current assets / Current Liabilities

8)        Quick test ratio = (Current assets - stock) / Current Liabilities

9)        Debtor days = (Average trade debtors / Credit sales) x 365 days

10)     Creditor days = (Average trade creditors / Credit Purchases) x 365 days

Ratios
 2010
 2009
 
Gross profit margin
 37.50%
 32%
 
Net profit margin
 12.50%
 11.40%
 
Return on equity
 31.91%
 40.71%
 
Return on assets
 28.10%
 32.09%
 
Interest cover
 29
 27.6
 
Debt ratio
 27.13%
 34.88%
 
current ratio
 5.07
 3.4
 
quick test ratio
 2.33
 1.4
 
Debtor days
 45.63
 73
 
Creditor days
 26.61
 29.57
 (b)

Internal factors include capital, management and strategy, which can be examined by ratio analysis. The ratios that will be used include interest cover, debt ratio, current return on equity, return on assets, gross profit margin, quick test ratio, and net profit margin (Eugene and Michael, 2010). Through comparing the results of 2010 and 2009, we find the performance of R Ltd is stable and promising.

 External factors include the macro and micro environments (Martin and Fernando, 2002), such as social-culture, technology and customers, suppliers. From industry analysis, we can see that R Ltd. is situated in a highly competitive industry and the market in Hong Kong is saturated to a certain extent.#p#分頁標題#e#

By comparing the Debtor days and Creditor days of 2009 and 2010, we can see that the company achieved efficiency improvement.

(c)

Ratios
 2010
 2009
 change
 
Gross profit margin
 37.50%
 32%
 5.50%
 
Net profit margin
 12.50%
 11.40%
 1.10%
 
Return on equity
 31.91%
 40.71%
 -8.80%
 
Return on assets
 28.10%
 32.09%
 -3.99%
 
Interest cover
 29
 27.6
 1.4
 
Debt ratio
 27.13%
 34.88%
 -7.75%
 
current ratio
 5.07
 3.4
 1.67
 
quick test ratio
 2.33
 1.4
 0.93
 
Debtor days
 45.63
 73
 -27.37
 
Creditor days
 26.61
 29.57
 -2.96
 

(d)

Since it is assumed that the home cordless phone sector in Hong Kong is very keenly competitive and R finds it is quite difficult to hold or gain market share of 15%, we can see that R is having low relative market share and located in a high growth industry.

According to BCG model (Carl and George, 1998), it is the Question mark, which has rather bad cash characteristics and requires large amount of cash so as to maintain and increase market share. R Ltd. can pour into more investments so as to increase market share because according to results generated from the analysis in (a), R has good financing condition to support on further investment. However, whether this Question Mark will be become Star is uncertain since the market is extremely competitive and unpredictable.

Task3

Method 1:

From the analysis above, the relationship of fertilizer (X) and corn revenue (Y) is Y=1.56722X+27.125

(a) Fertilizer input in year 11 is 36, then x=36, Y=83.54492

(b) Fertilizer input in year 11 is 0, then x=0, Y= 27.125

   Given the inflation rate of 5%, the Revenue will be 27.125 (1+5%) = 28.48125

Method 2:

 From the analysis above, the relationship of fertilizer (X) and corn revenue (Y) is Y=33.13e^0.0288x

(a) Fertilizer input in year 11 is 36, then x=36, Y=93.432

 (b) Fertilizer input in year 11 is 0, then x=0, Y= 33.13

   Given the inflation rate of 5%, the Revenue will be 33.13(1+5%) = 34.7865

 Limitations of the forecasting:

Since forecasting is based on data that in the past, so the further away in the past the data is, the less accurate the model becomes.

 Reference list:

1.         Carl W Stern, George Stalk. (1998)  Perspectives on Strategy from the Boston Consulting Group. Wiley#p#分頁標題#e#

2.         Eugene F. Brigham, Michael C. Ehrhardt.(2010). Financial Management: Theory & Practice (13th ed.)

3.         Gallagher, Timothy (2003). Financial Management. Englewood Cliffs: Prentice Hall.

4.         Martin S. Fridson, Fernando Alvarez.(2002).Financial Statement Analysis Workbook: Step-by-Step Exercises and Tests to Help You Master Financial Statement Analysis. Wiley

 英國澳洲美國新西蘭代寫留學生Finance and 代寫留學Accountingdissertation,Term Paper,dissertation代寫,財務管理dissertation代寫,留學生會計dissertation代寫