1. The total cost of the equipment is $800 000. NK is considering two different sources offinance:• (Option A) a seven-year $720 000 bank loan.• (Option B) selling S800 000 in shares.Financial information for NK, for the year ending 31 May 2014:CashS176 000Cost of goods sold$3 900 000Creditors$230 000DebtorsS674 000ExpensesS3 800 000Interest$120 000Loan capitalNet fixed assets$2 600 000Retained profit$970 000Share capital$300 000Sales revenue$8 200 000Short-tem borrowing$270 000Stock$320 000Тах$70 000Using data from the table:(a) calculate loan capital X (show all your working);(b) construct a fully labelled balance sheet for NK;(e) calculate NKs gross profit margin (show all your working);(d) calculate NK's forecasted gearing ratio for Option A and for Option B (showall your working)

Financial statement: Financial statements are organized summaries of detailed information about the…

1. The total cost of the equipment is $800 000. K is considering two different sources of finance: • (Option A) a seven-year $720 000 bank loan. •(Option B) selling S800 000 in shares. Financial information for NK, for the year ending 31 May 2014: Cash S176 000 Cost of goods sold $3 900 000 Creditors $230 000 Debtors $674 000 Expenses $3 800 000 Interest $120 000 Loan capital Net fixed sets $2 600 000 Retained profit $970 000 Share capital $300 000 Sales revenue $8 200 000 Short-term borrowing $270 000 Stock $320 000 Tax $70 000 Using data from the table: (a) calculate loan capital X (show all your working); (b) construct a fully labelled balance sheet for NK: (e) calculate NK's gross profit margin (show all your working); (d) calculate NK's forecasted gearing ratio for Option A and for Option B (show all your working).

1. The total cost of the equipment is $800 000. K is considering two different sources of finance: • (Option A) a seven-year $720 000 bank loan. •(Option B) selling S800 000 in shares. Financial information for NK, for the year ending 31 May 2014: Cash S176 000 Cost of goods sold $3 900 000 Creditors $230 000 Debtors $674 000 Expenses $3 800 000 Interest $120 000 Loan capital Net fixed sets $2 600 000 Retained profit $970 000 Share capital $300 000 Sales revenue $8 200 000 Short-term borrowing $270 000 Stock $320 000 Tax $70 000 Using data from the table: (a) calculate loan capital X (show all your working); (b) construct a fully labelled balance sheet for NK: (e) calculate NK's gross profit margin (show all your working); (d) calculate NK's forecasted gearing ratio for Option A and for Option B (show all your working).

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A firm borrows $255,000 from a bank and agrees to pay back the bank over 4 years at 12%. What are the total finance charages? Group of answer choices $25,384.22 $67, 326.15 $22, 924.66 $13, 872.19 $650.00 $ 20,879.60 $183, 487.11 $6.87 $1,892, 660.66 $1,988, 374.34 $1,765, 147.96
Bank of Charub ($ million)Assets: Liabilities and Net Worth:270 day US Treasury bills $500m 1 year Certificates of Deposit $550m2 year consumer loans Demand Deposits $750mFixed rate, 12% p.a. annually $275m 2 year Bonds $175m7 year commercial loans $350m Fixed rate, 7.5% p.a. annuallyFixed rate, 9% p.a. annually Overnight Fed Funds $350m10 year fixed rate mortgages $675mFixed rate, 6.5% p.a. monthly10 year floating rate mortgages $125m Equity $100mLIBOR+50bp, monthly roll dateNotes: The 1 year Certificates of Deposit pay 1.95% p.a. annually. The demand depositsare non-interest bearing and have a duration of zero. The 7 year commercial loans have aduration of 4.75 years. The fixed rate mortgages have a duration of 8.3 years. All valuesare market values. 5. What is the convexity of the 2 year consumer loans if they yield 6% p.a. witha coupon rate of 12% p.a. paid annually?a. 4.98b. 2.83c. 3.85d. 1.95e. 2.01
Horizons plc had the following bank loans outstanding during the whole of 20X8 which form the company’s general borrowings for the year: £m 10% loan repayable 20X9 250 8% loan repayable 20Y2 750 Horizons plc began construction of a qualifying asset on 1 May 20X8 and withdrew funds of £45 million on that date to fund construction. On 1 September 20X8 an additional £60 million was withdrawn for the same purpose. Calculate the borrowing costs which can be capitalised in respect of this project for the year ended 31 December 20X8. Select one: a. £5,000,000 b. £4,250,000 c. £5,418,750 d. £850,000 e. £8,925,000 f. £3,056,250
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am. 238.
TI209 JADMANE BO Sources Trade and other payables Short-term borrowings Mortgage Long-term borrowings Share capital Retained earnings Amounts $200,000 250,000 500,000 250,000 300,000 800,000 The before-tax bank charges are 11.0% for the short-term borrowings, 10.0% for the long-term borrowings, and 10.5% on the mortgage. The shareholders expect to earn 16%. Assume that the company's income tax rate is 50%. 40% Questions financing 1. Calculate the company's after-tax cost of borrowing. 2. Calculate the company's weighted average cost of capital.
Bank B, on the other hand, makes a $105 loan at 7%, with $100 in deposits at 5% and only $10 in equity. Bank B purchases the rest of Assets as G-Bond at 5% interest rate. Bank B Loan 7% $105 G-Bond 5% ? Deposits 5% $100 Equity $10 Total Assets $? Total Equity and Deposit $110 compute ROE of Bank B= 38% 14% 13% 21% 26% 15% 16% 14%
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