Which of the following statements about effective rates and annualised percentage rates (APR's) is NOT correct?
Find Sidebar Corporation's Cash Flow From Assets (CFFA), also known as Free Cash Flow to the Firm (FCFF), over the year ending 30th June 2013.
Sidebar Corp | ||
Income Statement for | ||
year ending 30th June 2013 | ||
$m | ||
Sales | 405 | |
COGS | 100 | |
Depreciation | 34 | |
Rent expense | 22 | |
Interest expense | 39 | |
Taxable Income | 210 | |
Taxes at 30% | 63 | |
Net income | 147 | |
Sidebar Corp | ||
Balance Sheet | ||
as at 30th June | 2013 | 2012 |
$m | $m | |
Cash | 0 | 0 |
Inventory | 70 | 50 |
Trade debtors | 11 | 16 |
Rent paid in advance | 4 | 3 |
PPE | 700 | 680 |
Total assets | 785 | 749 |
Trade creditors | 11 | 19 |
Bond liabilities | 400 | 390 |
Contributed equity | 220 | 220 |
Retained profits | 154 | 120 |
Total L and OE | 785 | 749 |
Note: All figures are given in millions of dollars ($m).
The cash flow from assets was:
Question 444 investment decision, corporate financial decision theory
The investment decision primarily affects which part of a business?
Question 448 franking credit, personal tax on dividends, imputation tax system
A small private company has a single shareholder. This year the firm earned a $100 profit before tax. All of the firm's after tax profits will be paid out as dividends to the owner.
The corporate tax rate is 30% and the sole shareholder's personal marginal tax rate is 45%.
The Australian imputation tax system applies because the company generates all of its income in Australia and pays corporate tax to the Australian Tax Office. Therefore all of the company's dividends are fully franked. The sole shareholder is an Australian for tax purposes and can therefore use the franking credits to offset his personal income tax liability.
What will be the personal tax payable by the shareholder and the corporate tax payable by the company?
Question 455 income and capital returns, payout policy, DDM, market efficiency
A fairly priced unlevered firm plans to pay a dividend of $1 next year (t=1) which is expected to grow by 3% pa every year after that. The firm's required return on equity is 8% pa.
The firm is thinking about reducing its future dividend payments by 10% so that it can use the extra cash to invest in more projects which are expected to return 8% pa, and have the same risk as the existing projects. Therefore, next year's dividend will be $0.90. No new equity or debt will be issued to fund the new projects, they'll all be funded by the cut in dividends.
What will be the stock's new annual capital return (proportional increase in price per year) if the change in payout policy goes ahead?
Assume that payout policy is irrelevant to firm value (so there's no signalling effects) and that all rates are effective annual rates.
A firm has 2m shares and a market capitalisation of equity of $30m. The firm just announced earnings of $5m and paid an annual dividend of $0.75 per share.
What is the firm's (backward looking) price/earnings (PE) ratio?
A firm has a debt-to-equity ratio of 25%. What is its debt-to-assets ratio?
The expression 'you have to spend money to make money' relates to which business decision?
Question 929 standard error, mean and median returns, mode return, return distribution, arithmetic and geometric averages, continuously compounding rate
The arithmetic average continuously compounded or log gross discrete return (AALGDR) on the ASX200 accumulation index over the 24 years from 31 Dec 1992 to 31 Dec 2016 is 9.49% pa.
The arithmetic standard deviation (SDLGDR) is 16.92 percentage points pa.
Assume that the data are sample statistics, not population statistics. Assume that the log gross discrete returns are normally distributed.
What is the standard error of your estimate of the sample ASX200 accumulation index arithmetic average log gross discrete return (AALGDR) over the 24 years from 1992 to 2016?
The market's expected total return is 10% pa and the risk free rate is 5% pa, both given as effective annual rates.
A stock has a beta of 0.7.
In the last 5 minutes, bad economic news was released showing a higher chance of recession. Over this time the share market fell by 2%. The risk free rate was unchanged. What do you think was the stock's historical return over the last 5 minutes, given as an effective 5 minute rate?