Calculation of weighted average number of shares [IAS 33.IE2] Shares issued Treasury Shares shares* outstanding 1 January 2013 Balance at beginning of year 2,000 300 1,700 31-May-13 Issue of new shares for cash 800 2,500 1 December 2013 Purchase of treasury shares for cash 250 2,250 31 December 2013 Balance at year end 2,800 550 2,250 Calculation of weighted average: (1,700 x 5/12) + (2,500 […]

Increasing rate preference shares [IAS 33.IE1] Entity D issued non-convertible, non-redeemable class A cumulative preference shares of €100 par value on 1 January 2013. The class A preference shares are entitled to a cumulative annual dividend of €7 per share starting in 2015. At the time of issue, the market rate dividend yield on the class A preference shares was 7 per cent a year. […]

Marleboro Memorial Hospital is expecting its new cancer center to generate the following cash flows: Givens Years 0 1 2 3 4 5 Initial investment ($20,000,000) Net operatios cash flows ($4,000,000) ($6,000,000) ($10,000,000) ($12,000,000) ($25,000,000) a. Determine the payback for the new cancer center. b. Determine the net present value using a cost of capital of 12 percent. c. Determine the net present value at […]

Buxton Community is expecting its new dialysis unit to generate the following cash flows: Givens Years 0 1 2 3 4 5 Initial investment ($10,000,000) Net operatios cash flows ($1,500,000) ($2,000,000) ($4,000,000) ($7,000,000) ($14,000,000) a. Determine the payback for the new dialysis unit. b. Determine the NPV using a cost of capital of 11 percent. c. Determine the NPV at a cost of capital of […]

Letterman Hospital expects Projects A and B to generate the following cash flows: Givens (in thousands) Years 0 1 2 3 4 5 1 Initial investment ($2,500) 2 Net operating cash flows for Project A $1,800 $1,600 $900 $400 $200 3 Net operating cash flows for Project II $200 $400 $900 $1,600 $1,800 4 Discount rate for Part a 15% 5 Discount rate for Part […]

Castle Rock Medical Center expects Projects X and Y to generate the following cash flows: Givens (in thousands) Years 0 1 2 3 4 5 Initial investment ($6,500) Net operating cash flows for Project X $5,000 $3,000 $2,000 $1,600 $1,000 Net operating cash flows for Project Y $1,000 $1,600 $2,000 $3,000 $5,000 Discount rate for Part a 13% Discount rate for Pan b 8% a. […]

The meaning of ‘public market’ in the context of a fund Many investment funds are listed on a public stock exchange for informational purposes, in particular to facilitate the valuation of portfolios by investors or because it is a requirement for the fund to be listed on a public stock exchange to make it eligible for investment by entities that are required to invest only […]

Martin Medical expects Alpha Project and Beta Project to generate the following: Alpha Project 1 (in thousands) Years 0 1 2 3 4 5 Givens Initial investment ($16,000) Net operating cash flows ($8,000) $5,000 $10,000 $14,000 $24,000 Beta Project 2 (in thousands) Givens Initial investment ($24,000) Net operating cash flows $(6,000) $6,000 $6,000 $6,000 $6,000 a. Determine the payback for both projects. b. Determine the […]

Combining internally reported operating segments with similar characteristics In the information presented to the board of directors, a single-product company has six internally reported operating segments, Australia, France, Germany, Italy, UK and USA. The company dominates its markets in Australia and Germany and consequently enjoys superior operating profits. Its other markets are fragmented, competition is greater and therefore margins are lower. Can any segments be […]

Tin Man Memorial Hospital, a non-taxpaying entity, is starting a new inpatient heart center on its third floor. The expected patient volume demands will generate $4,500,000 per year in revenues for the next five years. The new center will incur operating expenses, excluding depreciation, of $2,500,000 per year for the next five years. The initial cost of building and equipment is $6,500,000. Straight-line depreciation is […]