Aria Jones has just been appointed as a Chief Financial Officer of Sweet Thing Bakery Ltd (Sweet Thing) in February 2020. Upon her appointment she was investigating the feasibility of an expansion project to the amount of R4 million. This expansion project will not only diversify the products Sweet Thing sells, but will also include the upgrade of outdated machinery, expansion of the workforce to help with job creation and the enlargement of the regions in which they sell. However, in March the Corona Virus placed all future plans on hold while the whole world was in lockdown. The Covid-19 pandemic has placed enormous strain on the South African economy resulting in a significant decrease in the interest rates and other costs of financing. Aria decided to re-evaluate Sweet Thing's Weighted Average Cost of Capital (WACC) before considering any future expansion projects, as the cost
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- The Doodad Company This case was developed by Rakesh Pandey, revised August 2021, February 2022 and August 2022 A Core project team has named their company, The Doodad Company (TDC) and they will be making doodads, also called gadgets, for their project. It is still early in the project, but the team has worked hard to gather data to start building their business model. Their objective is to have a one-year model for profit to present at the Business Development Workshop that will be coming up in a couple of weeks. Based on their preliminary interviews, the TDC team has determined that their likely retail price is going to be $10, and they have estimated their segment size to be about 10 million customers. While the team has not reviewed the BASES sales forecasting model in detail in marketing yet, they have been provided with some place holders for the year being considered (Year 2). The place holder values are as follows: Purchase Intent (PI) 15% Awareness 15% Distribution (ACV) 15 %…Problem 1 It is now 2024. You have been assigned as a financial advisor of a Philippine start-up company They assigned you to value its existing business had they exited the market 6 years ago, meaning in 2018. Details of the company are as follows: Futher assume that the company will nat exist beyond 2023, meaning the going concem principle will not apply. Also assume that the client wants you to use the dividend discount model for this project. 2018 6,458,000.0 2019 7,412,000.0 2020 8,126,000.0 2022 8,941,000.0 9.457.000.0 42.0% 28.0% 30.0% 2021 2023 Sales Variable expenses Fixed expenses Tax Rate 10,025,000.0 40.0% 30.0% 44.0% 30.0% 30.0% 38.0% 40.0% 41.0% 30.0% 29.0% 21.0% 31.0% 25.0% 24.0% 25.0% After conducting a financial due diligence, you found that: 1.) 2019 sales are inclusive of a 250.000 sales invoice that were in transit as of EOY 2019, thus delivered to the client on 2020, with terms of FOB Shipping Point. 2.) 2020 sales excluded a contract signed for senvices worth…Question 2 Jeanius plc is considering an investment of £10 million in a new trouser production plant. The project business plan is based on the following assumptions: • The project will start on 1st January 2022. The initial investment is assumed to be incurred at the start of the project. Production will start on 1st January 2024. • Production will be 2 million pairs of trousers each year for the first 8 years of production and then increased to 4 million pairs. Profits will be £0.75 per pair of trousers to be received at the beginning of each calendar year. Profits increase by 2% each year starting in the 3rd year of production. • The plant will incur maintenance costs of £500,000 incurred at the end of each year after start of production. From the 6th year of production onwards, maintenance costs will increase by 3% each year. (a) Calculate (i) the discounted payback period of the project assuming an AER of 7.5% per annum (ii) the accumulated value of the project on 1st of January…
- Question 2 Kako Ltd is considering introducing a new product unto the market. This will require the injection of capital to the tune of GH¢20,000 for the purchase of the equipment for production. The cost of the building that Kako Ltd intends to use for the project is GH¢30,000. The Production and Marketing department has presented the information in the table below: 2019 Variable cost per unit of the product GH¢2 Selling price per unit GH¢6 Quantity 4000 units per annum Again the following information should be taken not of: Feasibility studies cost the company GH¢2000 Test marketing expenses amounts to GH¢3000 Variable cost will increase by 5% per annum Selling price will increase by 10% per annum Marketing expense will be 5% of sales revenue per year An initial working capital investment of GH¢2000 will be made. Subsequently, net working capital at the end of each year will be equal to 10 percent of sales for that year. In the final year of the…Question 1 Your business partner is interested in property investment and has been looking at properties in the Gauteng area for the last couple of years. During 2022 he invested in buildings in the Gauteng area. He intends to use these buildings as shared office space for business travellers who travel weekly between Johannesburg and their coastal residential homes. The buildings require renovations. The total cost of the renovations is R80 000 000. The renovations will be completed by 31 December 2022. The expenditure will occur evenly throughout the last six months of the 2022 year. The R80 000 000 needs to be financed entirely through a variety of loans. Your company has an excellent credit record, and the following is the value and related annual interest rate for each loan granted: Source Nedbank loan Convertible shares Government loan Foreign bonds Cryptocurrency Assume a 365-day year. REQUIRED: Q.1.1 Calculate the capitalisation rate. Amount (R) 30 000 000 15 000 000 15 000 000…Question A4 Saylor Ltd is considering a new contract that will require four additional skilled employees. Each of the employees could be recruited on a one year contract at £50,000 per employee. The staff will require to be managed by an existing manager who currently earns £100,000 per annum. This contract will probably take around 20% of the manager's time to supervise. As an alternative, the company could retrain existing staff who currently earn £40,000 per annum. The retraining costs will be £20,000 and if these staff were used they would need to be replaced at a cost of £125,000. Required: Identify the relevant labour costs of the contract.
- Question 1 Partners Telecom (“PT”) is a company based in Windhoek that sells mobile broadband (also called “data” in layman language) to individual customers. The company is considering selling the broadband business to its management in an arrangement called a management buyout (MBO). The following information has been made available for the proposal: - At the beginning of 2022, the date on which the business will be sold to management, the license to sell broadband will be having two years remaining. To acquire a license after it expires, there should be a tender and the outcome is unknown. - The company will apply a differential rate system that charges different rates during peak and off peak hours. Peak are hours are the hours between 9am and 5pm and will be charged $0.05 per minute in 2022. Off peak hours will be charged $0.02 per minutes in the same period. It is expected that in 2023 the charge will reduce by 10%. - The operating year will have 360 days. On average, consumption…Question 1 Your business partner is interested in property investment and has been looking at properties in the Gauteng area for the last couple of years. During 2022 he invested in buildings in the Gauteng area. He intends to use these buildings as shared office space for business travellers who travel weekly between Johannesburg and their coastal residential homes. The buildings require renovations. The total cost of the renovations is R80 000 000. The renovations will be completed by 31 December 2022. The expenditure will occur evenly throughout the last six months of the 2022 year. The R80 000 000 needs to be financed entirely through a variety of loans. Your company has an excellent credit record, and the following is the value and related annual interest rate for each loan granted: Source Nedbank loan Convertible shares Government loan Foreign bonds Cryptocurrency Assume a 365-day year. REQUIRED: Amount (R) 30 000 000 15 000 000 15 000 000 12 000 000 8 000 000 Q.1.2 Calculate the…HI5002 Finance for business Question 1 You are a newly employed finance manager for Finance Adventure Ltd. The following data is available for the company as of 31 June 2020: Current assets of $293,950 Current liabilities $68,700 Total assets $765,600 Equity $305,890 Required: The company’s Management Board required you to evaluate two alternative options of debt funding and equity funding for a new project. What is the job are you doing to complete the task? (referring to one out of 3 important questions of corporate finance for your answer) Calculate non-current assets, non-current liabilities and build a balance sheet for the company? Calculate the return on assets (ROA) of the company given that return on equity (ROE) is 35%? What is the price earnings ratio (PE) of the company, given total number of outstanding ordinary shares is 57,000 and…
- Finance John and John Plc. is a midsized electronics manufacturing company in the West of Scotland. You have recently joined as a finance manager at John and John. Last week, the marketing manager brought a new project to your attention. This project is about manufacturing robot vacuum cleaners ETX600 with an expected product life cycle of 4 years. In 2019, John and John Plc plans to launch these new vacuum cleaners if the project is financially feasible. Research and development costs incurred in the past three years amount to £150,000. Advertising is expected to cost £25,000 in year 1. Advertising costs will reduce by 10% every year thereafter. The company expects that sales in the first year will be £800,000, second and third year sales will be £650,000 and sales in the fourth year will be £600,000. Variable costs will be 50% of sales each year and the fixed production cost is expected to be £100,000 per year. The company estimates that if these new robot vacuum cleaners are…Finance In Class Assignment 2 April 13, 2023 Case Study Cable & Moore With the company expanding into several new markets in the coming months, Cable & Moore was anticipating a large increase in sales revenue. The future looked bright for this provider of television, telephone, and Internet services. However, management of Cable & Moore was well aware of the importance of customer service in new markets. If customers had problems with new service and could not quickly and efficiently have their problems solved, demand would quickly erode, and it might take years to recover from the bad publicity. Therefore, management was adamant that there be enough well-trained customer service representatives to handle the calls from new customers and from potential customers. Based on experience in other markets, the anticipated number of phone calls to customer service was projected. Given the average call-length, the number of hours of customer-service time from April to August was…PT. Nusantara Indonesia is one of the most prestigious companies providing holiday travel packages to tourism destinations in Indonesia. The company's management is undergoing expansion strategy to cater higher demand in 2023 onward. As part of the strategy, the company is evaluating two independent projects that should be started in mid-2022 in order to be completed in the end of December 2027. In 2022, PT. Nusantara received new capital injection from strategic investor in California, US. Next week, the financial manager of PT. Nusantara Indonesia will bring the two project’s proposals to the board of directors for their approval. The manager prepares the cost and expected cash flows generating from the project as shown in Table 1. TABLE 1 Year Project Cenderawasih A Project Cenderawasih B 0 Initial investment of USD500,000 Initial investment of USD650,000 1 Cash flow year 1 = USD150,000 Cash flow year 1 of USD170,000 2 Cash flow year 2 = USD150,000 Cash flow increased by…