PFIN 7:STUDENT EDITION-MINDTAP (1 TERM)
7th Edition
ISBN: 9780357033647
Author: Billingsley
Publisher: CENGAGE L
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Chapter 10, Problem 4LO
Summary Introduction
To analyze: The coverage in PAP (Personal Automobile Policy) and choose a policy that is most cost-effective policy.
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Where discount factors are required, use only the four decimals present value tables (Appendix 1 and 2) that appear after the formula sheet.
REQUIREDUse the information provided below to answer the following questions. Ignore taxes.5.1 Calculate the Payback Period of both projects (expressed in years, months and days.) 5.2 Calculate the Net Present Value of both projects. (Your answers must include thecalculations of the present values and NPVs.) 5.3 Calculate the Internal Rate of Return (IRR) of Project B (expressed to two decimal places). Your answer must include two net present value calculations (using consecutive cost ofcapital rates) and interpolation. 5.4 On the basis of the IRR, should Project B be considered favourably for investment? Why? 5.5 Calculate the Accounting Rate of Return on average investment of Project A (expressedto two decimal places).
INFORMATION
The following information relates to two capital expenditure…
Use the information provided below to prepare the following for May and June 2025:
Debtors Collection Schedule
Cash Budget.
The following information was provided by Lewis Traders:1. An unfavourable bank balance of R40 000 is expected on 30 April 2025. 2. Budgeted credit sales for April to June 2025 are as follows:
April
R420 000
May
R372 000
June
R432 000
3. Credit sales are estimated to be 60% of the total sales. The balance of the sales is for cash. Customers who purchase for cash are entitled to a discount of 10%.4. Collections from credit sales are expected to be as follows:• 30% during the month of sale (These debtors receive a 5% discount.)• 70% in the following month.5. Budgeted purchases of inventories from April to June 2025 are as follows:
April
R360 000
May
R320 000
June
R400 000
Prepare the Pro Forma Statement of Financial Position as at 31 December 2025 from the information provided below.
Info:
The budgeted Statement of Financial Position of Candyland Ltd as at 31 December 2024 is as follows:
Candyland Ltd
Statement of Financial Position as at 31 December 2024
R
ASSETS
Non-current assets
2 500 000
Fixed/Tangible assets
2 500 000
Current assets
2 250 000
Inventory
1 500 000
Accounts receivable
625 000
Cash
125 000
Total assets
4 750 000
EQUITY AND LIABILITIES
Equity
3 500 000
Ordinary share capital (150 000 shares)
3 000 000
Retained earnings
500 000
Non-current liabilities
750 000
Long-term loan: Barbie Bank
750 000
Current liabilities
500 000
Accounts payable
500 000
Total equity and liabilities
4 750 000
Candyland Ltd provided the following additional financial data to assist in the preparation of the Pro Forma…
Chapter 10 Solutions
PFIN 7:STUDENT EDITION-MINDTAP (1 TERM)
Ch. 10 - Prob. 1LOCh. 10 - Identify the types of coverage provided by...Ch. 10 - Prob. 3LOCh. 10 - Prob. 4LOCh. 10 - Prob. 5LOCh. 10 - Choose a property and liability insurance agent...Ch. 10 - Prob. 1FPECh. 10 - Last year, Thea and Rory Brown bought a home with...Ch. 10 - Prob. 3FPECh. 10 - Prob. 4FPE
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- Use the information provided below to answer the following questions. The answers to the ratios must be expressed to two decimal places and be fully stated e.g. 2.15:1; 24.67% etc Use the appropriate ratio to determine whether Sunday Limited will be able to settle its short-term debts when business conditions are Is Sunday Limited efficient in the collection of its debts? Motivate your Will the shareholders of Sunday Limited be satisfied with their return on investment? Motivate your answer with the relevant Is Sunday Limited taking advantage of the credit terms offered by creditors? Motivate your Use the relevant ratio to determine the percentage of debt to the assets of the Comment on your answer. Compare the dividend per share with the earnings per share of Sunday Limited. What conclusions may be drawn from this? Extracts of the financial statements of Sunday Limited for 2023 are given below. Sunday Limited Statement of Comprehensive Income for the year end 31 December 2023…arrow_forwardUse the information given below to determine the number of orders that should be placed for the year, based on the economic order quantity. Information Abby Traders sells a product which has a steady monthly demand of 12 000 units. The product is purchased from a supplier at R50 per unit. The ordering cost is R6 per order. The holding cost is 5.4% of the unit purchase price. 2. Use the information provided below to calculate the value of closing inventory as at 31 March 2024, if the weighted average cost method is used to value inventories. Express the weighted average cost per unit in rands and cents. Units Cost price per unit Inventory on 01 March 5000 R10 Purchased on 10 March 15000 R11 Returned to supplier (see 10 March) 2000 ? Purchased on 25 March 7000 R12 Sales for March 22000 INFORMATION The following information was extracted from the records of Cargo Stores for March 2024 3. Study the information given below and advise whether Steffi Stores…arrow_forwardI need typing clear urjent no chatgpt used i will give 5 upvotes pls full explainarrow_forward
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