ACCA F4-F9模擬題及解析(6)-

1、 ACCA F4-F9模擬題及解析(61 BQK Co, a house-building company, plans to build 100 houses on a development site over the next four years. The purchase cost of the development site is $4,000,000, payable at the start of the first year of construction. Two types of house will be built, with annual sales of eac

2、h house expected to be as follows:Year 1 2 3 4Number of small houses sold: 15 20 15 5Number of large houses sold: 7 8 15 15Houses are built in the year of sale. Each customer finances the purchase of a home by taking out a long-term personal loan from their bank. Financial information relating to ea

3、ch type of house is as follows:Small house Large houseSelling price: $200,000 $350,000Variable cost of construction: $100,000 $200,000Selling prices and variable cost of construction are in current price terms, before allowing for selling price inflation of 3% per year and variable cost of construct

4、ion inflation of 4·5% per year.Fixed infrastructure costs of $1,500,000 per year in current price terms would be incurred. These would not relate to any specific house, but would be for the provision of new roads, gardens, drainage and utilities. Infrastructure cost inflation is expected to be

5、2% per year.BQK Co pays profit tax one year in arrears at an annual rate of 30%. The company can claim capital allowances on the purchase cost of the development site on a straight-line basis over the four years of construction.BQK Co has a real after-tax cost of capital of 9% per year and a nominal

6、 after-tax cost of capital of 12% per year.New investments are required by the company to have a before-tax return on capital employed (accounting rate of return on an average investment basis of 20% per year.Required:(a Calculate the net present value of the proposed investment and comment on its f

7、inancial acceptability. Workto the nearest $1,000. (13 marks(b Calculate the before-tax return on capital employed (accounting rate of return of the proposed investment on an average investment basis and discuss briefly its financial acceptability. (5 marks (c Discuss the effect of a substantial ris

8、e in interest rates on the financing cost of BQK Co and its customers,and on the capital investment appraisal decision-making process of BQK Co. (7 marks(25 marks2.KXP Co is an e-business which trades solely over the internet. In the last year the company had sales of $15 million.All sales were on 3

9、0 days credit to commercial customers.Extracts from the companys most recent statement of financial position relating to working capital are as follows:$000Trade receivables 2,466Trade payables 2,220Overdraft 3,000In order to encourage customers to pay on time, KXP Co proposes introducing an early s

10、ettlement discount of 1% for payment within 30 days, while increasing its normal credit period to 45 days. It is expected that, on average, 50% of customers will take the discount and pay within 30 days, 30% of customers will pay after 45 days, and 20% of customers will not change their current payi

11、ng behaviour.KXP Co currently orders 15,000 units per month of Product Z, demand for which is constant. There is only one supplier of Product Z and the cost of Product Z purchases over the last year was $540,000. The supplier has offered a 2% discount for orders of Product Z of 30,000 units or more.

12、 Each order costs KXP Co $150 to place and the holding cost is 24 cents per unit per year.KXP Co has an overdraft facility charging interest of 6% per year.Required:(a Calculate the net benefit or cost of the proposed changes in trade receivables policy and comment on your findings. (6 marks(b Calcu

13、late whether the bulk purchase discount offered by the supplier is financially acceptable and comment on the assumptions made by your calculation. (6 marks(c Identify and discuss the factors to be considered in determining the optimum level of cash to be held by a company. (5 marks(d Discuss the fac

14、tors to be considered in formulating a trade receivables management policy.(8 marks (25 marks 試題答案:1. (1,530 (1,561 (1,592 (1,624 Before-tax cash flow 1,053 1,722 2,288 1,236Tax liability (316 (517 (686 (371CA tax benefits 300 300 300 300 After-tax cash flow 1,053 1,706 2,071 850 (71Discount at 12%

15、0·893 0·797 0·712 0·636 0·567 Present values 940 1,360 1,475 541 (40 $000PV of future cash flows 4,276Initial investment (4,000276 CommentSince the proposed investment has a positive net present value of $276,000, it is financially acceptable.WorkingsSales revenueYear 1 2 3

16、4Sales of small houses (houses/yr 15 20 15 5Sales of large houses (houses/yr 7 8 15 15Small house selling price ($000/house 200 200 200 200Large house selling price ($000/house 350 350 350 350Sales revenue (small houses ($000/yr 3,000 4,000 3,000 1,000Sales revenue (large houses ($000/yr 2,450 2,800

17、 5,250 5,250 Total sales revenue ($/yr 5,450 6,800 8,250 6,250 Inflated sales revenue ($/yr 5,614 7,214 9,015 7,034 Variable costs of constructionYear 1 2 3 4Sales of small houses (houses/yr 15 20 15 5Sales of large houses (houses/yr 7 8 15 15Small house variable cost ($000/house 100 100 100 100Larg

18、e house variable cost ($000/house 200 200 200 200Variable cost (small houses ($000/yr 1,500 2,000 1,500 500Variable cost (large houses ($000/yr 1,400 1,600 3,000 3,000 Total variable cost ($/yr 2,900 3,600 4,500 3,500 Inflated total variable cost ($/yr 3,031 3,931 5,135 4,174Fixed infrastructure cos

19、tsYear 1 2 3 4Fixed costs ($000/yr 1,500 1,500 1,500 1,500Inflated fixed costs ($000/yr 1,530 1,561 1,592 1,624Alternative NPV calculationYear 1 2 3 4 5$000 $000 $000 $000 $000Before-tax cash flow 1,053 1,722 2,288 1,236Capital allowances (1,000 (1,000 (1,000 (1,000 Taxable profit 53 722 1,288 236Ta

20、xation (16 (217 (386 (71 Profit after tax 53 706 1,071 (150 (71Add back allowances 1,000 1,000 1,000 1,000 After-tax cash flow 1,053 1,706 2,071 850 (71Discount at 12% 0·893 0·797 0·712 0·636 0·567 Present values 940 1,360 1,475 541 (40 $000 PV of future cash flows 4,276Init

21、ial investment (4,000276 (bCalculation of return on capital employed (ROCETotal before-tax cash flow $6,299,000Total depreciation $4,000,000Total accounting profit $2,299,000Average annual profit ($000/year = 2,299,000/4 = $574,750Average investment ($000 = 4,000,000/2 = $2,000,000ROCE (ARR = 100 x

22、574,750/2,000,000 = 28·7%DiscussionThe ROCE is greater than the 20% target ROCE of the investing company and so the proposed investment is financially acceptable. However, the investment decision should be made on the basis of information provided by a discounted cash flow (DCF method, such as

23、net present value or internal rate of return.(c A substantial increase in interest rates will increase the financing costs of BQK Co and its customers. These will affect the discount rate used in the investment appraisal decision-making process and the value of project variables.Customer financing c

24、osts Each customer finances their house purchase through a long-term personal loan from their bank. A substantial rise in interest rates will increase the borrowing costs of existing and potential customers of BQK Co, and will therefore increase the amount of cash they pay to buy one of the houses.C

25、ompany financing costsThe cost of debt of BQK Co will change with interest rates in the economy. A substantial rise in interest rates will therefore lead to a substantial increase in the cost of debt of the company. This will lead to an increase in the weighted average cost of capital (WACC of BQK C

26、o, the actual increase depending on the relative proportion of debt compared to equity in the companys capital structure.The cost of equity will also increase as interest rates rise, contributing to the increase in the WACC. Since most companies have a greater proportion of equity finance as compare

27、d to debt finance, the increase in the cost of equity is likely to have a more significant effect on the財(cái)經(jīng)網(wǎng)絡(luò)教育領(lǐng)導(dǎo)品牌 _ WACC than the increase in the cost of debt. Effect on the capital investment appraisal process Since the business of the company is building houses, the WACC of the company is likely

28、to be the discount rate it uses in evaluating investment decisions such as the one under consideration. An increase in WACC will therefore lead to a decrease in the NPV of investment projects and some projects may no longer be attractive. In order to make the investment project more attractive, the

29、prices of the houses offered for sale might have to increase. This could make the houses more difficult to sell and lead to increased costs due to slower sales. Houses could also be more difficult to sell as customers would be more reluctant to commit themselves to long-term personal loans when inte

30、rest rates are historically high. Construction and infrastructure costs might increase as suppliers seek to pass on their higher borrowing costs. Overall, income per year could decrease and the time period for the investment might need to be extended to accommodate the slower sales process. 2 (a Cal

31、culation of net cost/benefit Current receivables = $2,466,000 Receivables paying within 30 days = 15m x 0·5 x 30/365 = $616,438 Receivables paying within 45 days = 15m x 0·3 x 45/365 = $554,795 Receivables paying within 60 days = 15m x 0·2 x 60/365 = $493,151 Revised receivables = 616

32、,438 + 554,795 + 493,151 = $1,664,384 Reduction in receivables = 2,466,000 1,664,384 = $801,616 Reduction in financing cost = 801,616 x 0·06 = $48,097 Cost of discount = 15m x 0·5 x 0·01 = $75,000 Net cost of proposed changes in receivables policy = 75,000 48,097 = $26,903 Alternative

33、 approach to calculation of net cost/benefit Current receivables days = (2,466/15,000 x 365 = 60 days Revised receivables days = (30 x 0·5 + (45 x 0·3 + (60 x 0·2 = 40·5 days Decrease in receivables days = 60 40·5 = 19·5 days Decrease in receivables = 15m x 19·5/36

34、5 = $801,370 (The slight difference compared to the earlier answer is due to rounding Decrease in financing cost = 801,370 x 0·06 = $48,082 Net cost of proposed changes in receivables policy = 75,000 48,082 = $26,918 高頓網(wǎng)校 All Rights Reserved 版權(quán)所有 復(fù)制必究 6 財(cái)經(jīng)網(wǎng)絡(luò)教育領(lǐng)導(dǎo)品牌 _ Comment The proposed changes

35、 in trade receivables policy are not financially acceptable. However, if the trade terms offered are comparable with those of its competitors, KXP Co needs to investigate the reasons for the (on average late payment of current customers. This analysis also assumes constant sales and no bad debts, wh

36、ich is unlikely to be the case in reality. (b Cost of current inventory policy Cost of materials = $540,000 per year Annual ordering cost = 12 x 150 = $1,800 per year Annual holding cost = 0·24 x (15,000/2 = $1,800 per year Total cost of current inventory policy = 540,000 + 1,800 + 1,800 = $543

37、,600 per year Cost of inventory policy after bulk purchase discount Cost of materials after bulk purchase discount = 540,000 x 0·98 = $529,200 per year Annual demand = 12 x 15,000 = 180,000 units per year KXP Co will need to increase its order size to 30,000 units to gain the bulk discount Revi

38、sed number of orders = 180,000/30,000 = 6 orders per year Revised ordering cost = 6 x 150 = $900 per year Revised holding cost = 0·24 x (30,000/2 = $3,600 per year Revised total cost of inventory policy = 529,200 + 900 + 3,600 = $533,700 per year Evaluation of offer of bulk purchase discount Ne

39、t benefit of taking bulk purchase discount = 543,600 533,700 = $9,900 per year The bulk purchase discount looks to be financially acceptable. However, this evaluation is based on a number of unrealistic assumptions. For example, the ordering cost and the holding cost are assumed to be constant, whic

40、h is unlikely to be true in reality. Annual demand is assumed to be constant, whereas in practice seasonal and other changes in demand are likely. (c The following factors should be considered in determining the optimum level of cash to be held by a company, for example,at the start of a month or ot

41、her accounting control period. The transactions need for cash The amount of cash needed for the next period can be forecast using a cash budget, which will net off expected receipts against expected payments. This will determine the transactions need for cash, which is one of the three reasons for h

42、olding cash. The precautionary need for cash Although a cash budget will provide an estimate of the transactions need for cash, it will be based on assumptions about the future and will therefore be subject to uncertainty. The actual need for cash may be greater than the forecast need for cash. 高頓網(wǎng)校

43、 All Rights Reserved 版權(quán)所有 復(fù)制必究 7 財(cái)經(jīng)網(wǎng)絡(luò)教育領(lǐng)導(dǎo)品牌 _ In order to provide for any unexpected need for cash, a company can include some spare cash (a cash buffer in its cash balance. This is the precautionary need for cash. In determining the optimal level of cash to be held, a company will estimate the size

44、 of this cash buffer, for example from past experience, because it will be keen to minimise the opportunity cost of maintaining funds in cash form. The speculative need for cash There is always the possibility of an unexpected opportunity occurring in the business world and a company may wish to be

45、prepared to take advantage of such a business opportunity if it arises. It may therefore wish to have some cash available for this purpose. This is the speculative need for cash. Building a war chest for possible company acquisitions reflects this reason for holding cash. The availability of finance

46、 A company may choose to hold higher levels of cash if it has difficulty gaining access to cash when it needs it. For example,if a companys bank makes it difficult to access overdraft finance, or if a company is refused an overdraft facility, its precautionary need for cash will increase and its opt

47、imum cash level will therefore also increase. (d The factors to be considered in formulating a trade receivables policy relate to credit analysis, credit control and receivables collection. Credit analysis In offering credit, a company must consider that it will be exposed to the risk of late payment and the risk of bad debts. To reduce these risks, the company will assess the creditworthiness of its potential customers. In order to do this, the company needs information, which can come from a variety of sources, such as trade references, bank references, credit reference agencies,