Question 6 Year a. DORIAN Enterprise has developed a four-year investment plan which is expected to generate the following cash flows: 1 2 3 4 Cash flow GH¢ 30,000 45,000 48,000 50,000 The opportunity cost of capital is 18%. How much is this investment worth today? b. The financial data of DORIAN Enterprise is given as follows: Details Operating income Amount GH¢ Financial expense 275,000 47,000 Net impairment loss, gross loan portfolio 53,000 Operating expense 122,000 Gross loan portfolio 125,000 Delinquency + 1 month or more 14,000 Net subsidy 26,000 Interest rate charged on loans = 18% i. Compute the Subsidy Dependence Index (SDI) ii. Compute the Operational Self Sufficiency (OSS) iii. Compute the Portfolio at Risk (PAR) of DORIAN Ltd. iv. What do the values computed in (a), (b) and (c) represent? c. Below are the details of Accounts Receivable of DORIAN Ltd. Customer Outstanding Balance GH¢ Days outstanding 1 5,000 28 2 8,000 42 3 15,000 30 4 8,500 65 5 6,000 120 6 14,000 73 7 25,000 105 8 7,500 90 9 14,000 50 10 15,000 24 i. Construct an aging of accounts receivable schedule for DORIAN Ltd. ii. How much is expected from debtors in the next one month, two months and 3 months and beyond? iii. What options are available to DORIAN if it needs immediate cash to take advantage of some opportunity in the market?
Question 6 Year a. DORIAN Enterprise has developed a four-year investment plan which is expected to generate the following cash flows: 1 2 3 4 Cash flow GH¢ 30,000 45,000 48,000 50,000 The opportunity cost of capital is 18%. How much is this investment worth today? b. The financial data of DORIAN Enterprise is given as follows: Details Operating income Amount GH¢ Financial expense 275,000 47,000 Net impairment loss, gross loan portfolio 53,000 Operating expense 122,000 Gross loan portfolio 125,000 Delinquency + 1 month or more 14,000 Net subsidy 26,000 Interest rate charged on loans = 18% i. Compute the Subsidy Dependence Index (SDI) ii. Compute the Operational Self Sufficiency (OSS) iii. Compute the Portfolio at Risk (PAR) of DORIAN Ltd. iv. What do the values computed in (a), (b) and (c) represent? c. Below are the details of Accounts Receivable of DORIAN Ltd. Customer Outstanding Balance GH¢ Days outstanding 1 5,000 28 2 8,000 42 3 15,000 30 4 8,500 65 5 6,000 120 6 14,000 73 7 25,000 105 8 7,500 90 9 14,000 50 10 15,000 24 i. Construct an aging of accounts receivable schedule for DORIAN Ltd. ii. How much is expected from debtors in the next one month, two months and 3 months and beyond? iii. What options are available to DORIAN if it needs immediate cash to take advantage of some opportunity in the market?
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter21: Dynamic Capital Structures And Corporate Valuation
Section: Chapter Questions
Problem 9P
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Transcribed Image Text:Question 6
Year
a. DORIAN Enterprise has developed a four-year
investment plan which is expected to generate the
following cash flows:
1 2 3 4
Cash flow GH¢ 30,000 45,000 48,000 50,000
The opportunity cost of capital is 18%. How much is this
investment worth today?
b. The financial data of DORIAN Enterprise is given as
follows:
Details
Operating income
Amount GH¢
Financial expense
275,000
47,000
Net impairment loss, gross loan portfolio 53,000
Operating expense
122,000
Gross loan portfolio
125,000
Delinquency + 1 month or more
14,000
Net subsidy
26,000
Interest rate charged on loans = 18%
i. Compute the Subsidy Dependence Index (SDI)
ii. Compute the Operational Self Sufficiency (OSS)
iii. Compute the Portfolio at Risk (PAR) of DORIAN Ltd.
iv. What do the values computed in (a), (b) and (c) represent?
c. Below are the details of Accounts Receivable of
DORIAN Ltd.
Customer Outstanding Balance GH¢ Days outstanding
1
5,000
28
2
8,000
42
3
15,000
30
4
8,500
65
5
6,000
120
6
14,000
73
7
25,000
105
8
7,500
90
9
14,000
50
10
15,000
24
i. Construct an aging of accounts receivable
schedule for DORIAN Ltd.
ii. How much is expected from debtors in the next
one month, two months and 3 months and
beyond?
iii. What options are available to DORIAN if it
needs immediate cash to take advantage of some
opportunity in the market?
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