Q1. Which of the next is the right components for Market Capitalization?
(MCQ)Earlier share worth × Variety of issued sharesCurrent share worth × Variety of issued sharesPrevious share worth × Variety of issued choice sharesCurrent share worth × Variety of issued convertible shares(2 marks)
Q2. Statements given beneath relate to asset-based valuation for fairness. Choose applicable varieties of asset-based valuation.
(HA)Historic Price Values are simply obtainable BOOK VALUE NET REALISABLE VALUE REPLACEMENT BASISMaximum Price to be paid for belongings by a purchaser BOOK VALUE NET REALISABLE VALUE REPLACEMENT BASISAsset Stripping BOOK VALUE NET REALISABLE VALUE REPLACEMENT BASIS(2 marks)
Q3. Given beneath is abstract of Vento Co.’s stability sheet:
Belongings $m Financed by $mNon-current belongings eight $1 Unusual shares 1Net-current belongings four Reserves 6- – Mortgage notes 5Total 12 12Non-current belongings embrace Bulldozer which price $7m when it was bought 5 years in the past when it had a helpful lifetime of ten years. The corporate’s depreciation coverage is on a straight-line foundation. These belongings had been valued $2m by knowledgeable.
What’s the worth per share utilizing NRV foundation? (MCQ) $5$5.25$5.5$5.75(2 marks)
This autumn. Following statements relate to asset-based valuation. (HA) It ignores intangible belongings DRAWBACK USEFULNESSIt ignores money flows from the belongings DRAWBACK USEFULNESSTo set a minimal worth in an occasion of a takeover DRAWBACK USEFULNESS(2 marks)
Q5. A Goal firm’s dividend per share is $zero.three/share ; its competitor has a dividend yield of eight%. Calculate the goal firm’s share worth? (FIB)4114804699000$ (2 marks)
Q6. Dosed Co has an earnings yield of 17%. Calculate the worth of the Dosed Co. based mostly on the current worth of the anticipated earnings? Utilizing the next data given beneath: (MCQ)Yr 1 2 three 4Earnings ($m) three.four three.9 four.1 four.5$26.47m$45.9m$62.5m$68.625m(2 marks)
Q7. Cato Co. has been open for bidding and it at present has earnings of $three.5m and has 1 million shares in subject & Cato Co. has a present share worth of $11 out there. Calculate the earnings yield of Xerox Co, a enterprise in the identical business sector? (MCQ)three.5%11%31.eight%35.three%(2 marks)
Q8. VV Co. has worth/earnings ratio of 15 and it is business competitor Kato Co. has an earnings yield of 20%. If assumed, a share worth of $1. When evaluating VV Co. to Kato Co, which of the next is appropriate? (HA)Earnings Yield HIGHER LOWERPrice/Earnings Ratio HIGHER LOWER(2 marks)
Q9. Ivo Co has made a proposal to purchase two of its each three shares of Rico Co. As a result of this merger, there’s a likelihood that incomes after deduction of tax will enhance by $10m per yr. Assuming that Ivo Co share worth will increase by $zero.5 after its merger and Ivo points new shares as consideration. What would be the worth/earnings ratio of the group utilizing the next data to nearest two decimal locations? (FIB)Ivo Co. Rico Co.Revenue after Tax $150 $40Market Share Costs $2.5 $1.2Number of shares 200m 60m901702476500(2 marks)
Q10. Which TWO of the next are the issues regarding Value/ Earnings ratio? (MRQ)Quoted firms with comparable enterprise actions are tough to findNot relevant for many who don’t desire paying dividends Represents historic costListed firm’s capital construction would possibly differ from unlisted firm’s(2 marks)
Q11. Yugo Co is buying Lotto Co. Yugo Co price of acquisition on the time of buying Lotto Co.’s 20,000 shares can be $400,000. The money flows are as follows: Yr 20X3 20X4 20X5 20X6Cash stream ($) 170,000 235,000 200,000 85,000The weighted common price of capital for the corporate is 10%. Calculate the share worth of Lotto Co utilizing discounted money stream? (MCQ)$7.5$7.84$eight.20$eight.61(2 marks)
Q12. Hath Co. has a future dividend forecast: Within the present yr and the primary yr, there can be no dividend paid. In yr two a dividend of $zero.36/share can be paid. In yr three a dividend of $zero.75/share can be paid and it’ll develop at 2% yearly. If the price of fairness is eight% what can be Hath Co. present share worth to the closest $? (FIB)3613152286000$ (2 marks)
Q13. Bitola Co is financed utilizing fairness solely. The corporate has simply paid the dividend of $80m and the earnings retained and invested had been 55%. The funding returns 27% and value of fairness is 18%. What’s the market worth of the corporate? (MCQ)$2,917m$three,023m$three,487m$three,716m(2 marks)
Q14. Dividend progress mannequin takes many assumptions under consideration. Choose the assumptions from the given statements? (MRQ)The estimates of future dividends and the price of capital are accurateAll buyers are homogenous Influential components of the market are included within the share worth The dividend develop continuously or not develop in any respect (2 marks)
Q15. Which of the next statements is a drawback for dividend progress mannequin? (MCQ)The expansion fee out there is the same as the expansion utilized in dividend progress mannequin The price of fairness used is an estimate of a capital asset pricing modelThe technique is relevant to all firms even when they do not present dividendsThe dividends paid by the corporate are perpetual (2 marks)
Q16. A agency has a difficulty 15% choice shares with a nominal worth of $1 every. At present, the required return of choice shareholders is 25%. The company tax is 30%. What’s the worth of a choice share? (FIB)3714753873500P0 (2 marks)144653070104000
Q17. Jorum Co has issued irredeemable mortgage notes with a coupon fee of eight%. If the required return of buyers is 2%, what’s the present market worth of the debt? (FIB)Market Worth ($) (2 marks)
Q18. B4U Co. has 11% redeemable bonds in subject having a price of debt of 16% earlier than tax. The tax fee out there is 27%. If the bonds are redeemed in six years’ time at a premium of 6% above the par worth. Calculate the market worth of the bond? (MCQ)$69.35$76.12$84$103.2(2 marks)
Q19. Curry has in subject 12% bonds with whole nominal worth $100,000 and a complete redemption worth $90,000, with curiosity payable quarterly. The price of debt on the bonds is 12% yearly. The bonds are redeemable on 31st March 20X2 and it’s now 31st December 20X0. Calculate the market worth? (FIB)14770102159000Market Worth ($) (2 marks)
Q20. A 6% redeemable mortgage word in Voltage Co is because of mature in 4 years’ time at a premium of 10%. It may be transformed into 15 bizarre shares on the similar time. Voltage Co pays a tax fee of 25%. Its present share worth is $four.65 and progress is predicted at eight%. If the shareholders require 10% return what’s the market worth? (MCQ)$51$75.13$94.15$110(2 marks)
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