{"id":8280,"date":"2021-11-22T21:56:22","date_gmt":"2021-11-22T10:56:22","guid":{"rendered":"https:\/\/casestudyhelp.com\/sample-questions\/?p=8280"},"modified":"2022-10-13T17:22:38","modified_gmt":"2022-10-13T06:22:38","slug":"mbamsc-financial-management-week-3-assignment-questions-and-answers","status":"publish","type":"post","link":"https:\/\/casestudyhelp.com\/sample-questions\/mbamsc-financial-management-week-3-assignment-questions-and-answers\/","title":{"rendered":"MBA\/MSC: Financial Management- Week 3 Assignment Questions and Answers"},"content":{"rendered":"

SBS\/ABS \u2013 MBA\/MSC: Financial Management- Week 3 Assignment Help – Abu Dhabi 2021<\/strong><\/h2>\n

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ASSIGNMENT TASK: 3 (20 Marks)<\/strong><\/p>\n

Answer the following questions:<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

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  1. It is November 2021 and ATMS Plc has the following capital structure:<\/strong><\/li>\n<\/ol>\n

    a).\u00a0 5% redeemable bonds- Par value \u00a3100 (redeemable November 2025)<\/p>\n

    b).\u00a0 8% irredeemable bonds- Par value \u00a3100<\/p>\n

    c).\u00a0 Ordinary shares- Nominal value 10p<\/p>\n

    d).\u00a0 7% Preference shares- Nominal Value \u00a31<\/p>\n

    Market Values<\/strong><\/p>\n

    e).\u00a0 5% redeemable bonds- \u00a31,000,000 in total with each bond currently priced at \u00a3108<\/p>\n

    f).\u00a0 8% irredeemable bonds- \u00a32,000,000 in total with each bond currently priced at \u00a3115<\/p>\n

    g).\u00a0 Ordinary Shares- \u00a34,000,000 in total with each share currently priced at 126p<\/p>\n

    h).\u00a0 7% preference shares- \u00a3500,000 in total with each share currently priced at 82p<\/p>\n

    Additional Information<\/strong><\/p>\n

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    1. The total ordinary share dividend proposed but not paid is 5.5p with an established year on year growth rate of 8%<\/li>\n
    2. ATMS Plc pays corporation tax at 20%<\/li>\n<\/ol>\n

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      Required- Calculate the individual cost of each of the 4 sources of capital and then the after tax Weighted Average Cost of Capital (WACC) of ATMS Plc\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (15 marks)<\/strong><\/p>\n

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      1. DT plc has \u00a320m of sales per year all of which are made on 60 days credit terms DT\u2019s CFO is considering offering a 10% discount for early payment (within 20 days)<\/li>\n<\/ol>\n

        It is forecast that 40% of DT\u2019s customers will take the discount and the remaining 60% will continue to pay in 60 days.<\/p>\n

        The short-term borrowing interest rate is 15%<\/p>\n

        Required<\/strong><\/p>\n

        Calculate whether the proposed discount will result in a net saving or cost for DT plc<\/p>\n

        (5 marks)<\/strong><\/p>\n

        For REF… Use:\u00a0#getanswers2001827<\/span><\/strong><\/p>\n