BUS704 Corporate Finance Task 3 Questions

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BUS704 Corporebuke Finance
Task 3 Questions
Answer every six (6) questions
Please be advised that your answers achieve be checked control plagiarism.
Penalties are distressing where this is detected.
Please assign to the announcements page in the BUS704 Course in Blackboard control details on USC’s cunning on academic mislead.
Question 1 (20 marks)
“Individual of the most material aspects to contrivance evaluation is to reach a punish regard of the remittance rebuke.”
Teach how the “remittance rebuke” is extraneous and assess its opinion in ratio to other factors that are also material to contrivance evaluation.
(20 marks)
Question 2 (20 marks)
Mustang Ltd. Is evaluating an i) extra dividend, and ii) a portion-extinguished recompense.
In either circumstance, $13,325 would be gone-by.
Current fairs are $4.25 per portion-out, and the portion-extinguished sells control $116. There are 5125 portion-outs ungathered.
Ignore taxes and other performance fees and mandible in sympathetic the cethcoming questions.
REQUIRED
a. Evaluate the span alternatives [i) and ii)] in conditions of the goods on the appraisement per portion-extinguished and on portion-outholder abundance.
(6 marks)
b. What achieve be the goods on Mustang’s fairs per portion-extinguished EPS and the appraisement-rights ratio underneathneath the span unanalogous scenarios [i) and ii)]?
(3 marks)
c. In the veritable universe, which of these span actions [i) or ii)] would you pointable advise? Why?
(3 marks)
d. “A assembly’s dividend cunning is pointable as material as its cardinal building cunning.” Discuss.
(8 marks)

Question 3 (20 marks)
Helena’s Health Foods
Rights anteriorly profit ($) 20,000
Trade appraise of something-due ($) 58,000
???? (%) 5.5%
???? (%) 13%
Trade appraise of equity ($) 143,818
Actual Aggregate trade appraise ($) 201,818
Equilibrium appraise 181,818
A succor assembly, La Salle Health Foods, has the identical financial counsel as Helena’s Health Foods, negative that La Salle Health Foods has no something-due and has an equilibrium appraise of $166,667 and a Cost of equity of 12%.
According to Modigliani and Miller, the aggregate trade appraise of the span companies should be the identical irrespective of the methods used to finance their investments.
REQUIRED:
a. Suppose you dwell 2% of the portion-outs Helena’s Health Foods. Show the order and the entiretyity by which you could growth your allowance extinguishedside increasing your promote.
(10 marks)
b. What are the virtual advantages and disadvantages to a assembly’s owners if the assembly growths the adaptation of something-due in its cardinal building?
(10 marks)
Question 4 (20 marks)
a. On 30 September 20XX, the quoted appraisement on the December 20XX 90-day bank beak futures compress was 93.67. Connor believed that profit rebukes would agitate balance the instant month. Suppose that he committed to five compresss on 30 September 20XX and close extinguished his collocation on 31 October 20XX at a appraisement of 92.46.
Ignoring performance costs, how greatly has Connor made or past?
Assume a Face Appraise of $1 favorite Australian. (4 marks)
b. On 10 October 20XX, the December 20XX 10-year chain futures compress was appraisementd at 94.685. Milly believed that profit rebukes would droop. Suppose she took tenure of span compresss on 10 October and close extinguished her collocation on 12 October at a appraisement of
96.020.
Ignoring performance costs, how greatly has Milly made or past in aggregate? Assume a Face Appraise of $100,000 (Australian) and $3,000 profit per half year.
(4 marks)
c. On 30 September 20XX, the December 20XX SPI 200 futures compress was appraisementd at 5350.0. Michelle believed the portion-extinguished trade was slight to agitate balance the instant month. Suppose she committed to five compresss on 30 September and close extinguished her collocation on 31 October at a appraisement of 5480.0.
Ignoring performance costs, how greatly has Michelle made or past?
Please assign to the textbook control the pricing controlmula.
(4 marks)
d. Teach the explanation determinants of futures appraisements and teach the factors that may object the futures trade appraisement at ripeness, to be unanalogous from the disfigurement trade appraisement at that identical epoch.
(8 marks)
Question 5 (20 marks)
Norton Ltd. portion-outs are trading at $24 each. Its directors feel announced a 1-for-4 fairs conclusion with a succor appraisement of $21.10 per portion-out.
REQUIRED
a. Calculate the hypothetical appraise of a fair to individual fantastic portion-out
(2 marks)
b. Calculate the ex-rights appraisement and the entiretyity of fair per portion-out.
(2 marks)
c. In supposition, what would bechance if the succor appraisement were $26.00?
(2 marks)
d. In supposition, what is the reserve practicable succor appraisement?
(2 marks)
e. “If a assembly underneathtakes a fairs conclusion it achieve regularly object the appraise
of the investor’s portion-outholding in that assembly to lessen.” Discuss.
(12 marks)
Question 6 (20 marks)
Describe and evaluate the class of influence ratioships that consist control an incorporated existence. To what distance do these ratioships supplement appraise to the incorporated existence? (Maximum 1000 suffrage).
Please mention bearing assignences according to USC cunning on assignencing. (See the cethcoming attach via the USC library.
https://libguides.usc.edu.au/help-referencing)
End of Examination