Docsity
Log inSign up
Docsity
Prepare for your exams
Prepare for your exams

Study with the several resources on Docsity

Earn points to download
Earn points to download

Earn points by helping other students or get them with a premium plan

Guidelines and tips
Guidelines and tips
Sell on Docsity
Sell on Docsity
Log inSign up

Prepare for your exams

Study with the several resources on Docsity

Find documents

Prepare for your exams with the study notes shared by other students like you on Docsity

Search Store documents

The best documents sold by students who completed their studies

Search through all study resources
Docsity AINEW

Summarize your documents, ask them questions, convert them into quizzes and concept maps

Explore questions

Clear up your doubts by reading the answers to questions asked by your fellow students

Earn points to download

Earn points by helping other students or get them with a premium plan

Share documents
download point icon20 Points

For each uploaded document

Answer questions
download point icon5 Points

For each given answer (max 1 per day)

All the ways to get free points
Get points immediately

Choose a premium plan with all the points you need

Study Opportunities

Choose your next study program

Get in touch with the best universities in the world. Search through thousands of universities and official partners

Community

Ask the community

Ask the community for help and clear up your study doubts

University Rankings

Discover the best universities in your country according to Docsity users

Free resources

Our save-the-student-ebooks!

Download our free guides on studying techniques, anxiety management strategies, and thesis advice from Docsity tutors

From our blog

Exams and Study
Go to the blog

Financial Management Examination: AC10710 - Introduction to Financial Management, Exams of Finance

Gandhi Institute of Technology and ManagementFinance

A past examination paper from the introduction to financial management module (ac10710) at a university. The paper consists of five questions, each focusing on various aspects of financial management such as investment appraisal, capital structure, corporate governance, and mergers and acquisitions. Students are required to calculate net present values, accounting rates of return, and weighted average costs of capital, as well as define and analyze concepts such as corporate governance and the agency problem.

Typology: Exams

2011/2012

Uploaded on 12/06/2012

kasuri
kasuri 🇮🇳

4.6

(11)

152 documents

1 / 5

Toggle sidebar

This page cannot be seen from the preview

Don't miss anything!

bg1
1
ARHOLIADAU EXAMINATIONS
Ionawr 2010 January 2010
AC10710 – INTRODUCTION TO FINANCIAL MANAGEMENT
Time Allowed: TWO hours
Answer ALL questions in SECTION A
Answer ONE question from SECTION B
Workings should be submitted for all questions requiring calculations.
Casio FX83ES or FX85ES calculators only may be used.
Any necessary assumptions introduced in answering a question are to be stated.
The following formulae may be of relevance:
Table of Present Value Factors attached at end of paper.
Total marks available: 300.
This paper contributes 80% of the overall module mark.
Turn Over
pf3
pf4
pf5

Partial preview of the text

Download Financial Management Examination: AC10710 - Introduction to Financial Management and more Exams Finance in PDF only on Docsity!

ARHOLIADAU EXAMINATIONS

Ionawr 2010 January 2010

AC10710 – INTRODUCTION TO FINANCIAL MANAGEMENT

Time Allowed: TWO hours

Answer ALL questions in SECTION A

Answer ONE question from SECTION B

Workings should be submitted for all questions requiring calculations.

Casio FX83ES or FX85ES calculators only may be used.

Any necessary assumptions introduced in answering a question are to be stated.

The following formulae may be of relevance:

Table of Present Value Factors attached at end of paper.

Total marks available: 300.

This paper contributes 80% of the overall module mark.

Turn Over

SECTION A – ANSWER ALL QUESTIONS

QUESTION 1

UK Company Attlee plc is faced with a decision regarding a new expansion strategy. The two

possible courses of action are:

1. Expand current facilities by building a temporary factory extension at the main plant in

the Midlands. This would cost a total of £300,000. The temporary extension has an

anticipated useful life of four years.

2. Build a new distribution hub in the South of England at a cost of £1,500,000, with an

anticipated useful life of four years.

Both projects assume a scrap value of zero when they reach the end of their respective lives.

Each is depreciated on a straight line basis over their respective lifetimes.

The relative estimated cash flows for each course of action are detailed in the following table:

Scale Initial outlay End of year 1 End of year 2 End of year 3 End of year 4

Temporary

Factory

Extension

New

Distribution

Hub

The appropriate discount rate over the project is expected to be 7% p.a.

REQUIRED:

i) Calculate the Payback Period, the Net Present Value, and the Accounting Rate of

Return for both potential investments.

All workings must be shown where relevant, all answers must be expressed to two

decimal places, nearest month (rounded upwards) or the nearest £. (70 marks)

ii) Indicate which investment you would recommend to the board of Attlee plc on the basis

of your results and justify your decision. (15 marks)

iii) What other factors apart from the relevant Payback Periods, Net Present Values and

Accounting Rates of Return might you consider in your decision? (15 marks)

(Total 100 marks)

Turn Over

SECTION B – ANSWER ONE QUESTION ONLY

QUESTION 3

a) Define the concept of ‘corporate governance’. Explain the key issues arising in the

debate surrounding corporate governance, and evaluate the use of corporate governance

in the modern day company setting. (50 marks)

b) Define and analyse the agency problem facing companies. Explain how shareholders

might incur agency costs in order to alleviate such problems. (50 marks)

(Total 100 marks)

QUESTION 4

a) Define a merger and an acquisition respectively, with respect to the motivations behind

each. Explain where the two differ. (20 marks)

b) Critically evaluate whether an acquisition creates value for the shareholders and

management of the target company and the shareholders and management of the

acquiring company respectively. (50 marks)

c) Explain possible defence strategies for a company facing an acquisition scenario, and

when a company may follow each of these defence strategies. (30 marks)

(Total 100 marks)

QUESTION 5

a) With regards to ownership, structure, liability etc. define and explain the various forms

that a business can take. (35 marks)

b) Explain the relative advantages and disadvantages of using the limited liability business

form. (35 marks)

c) By using numerical examples, show the relative transactions that take place when a

company issues shares via:

i) A bonus issue

ii) A rights issue (30 marks)

(Total 100 marks)

END OF PAPER

AC10710 Introduction to Financial Management

  • Year: Table of Present Value Factors
  • 5% 0.9524 0.9070 0.8638 0.8227 0.7835 0.7462 0.7107 0.6768 0.6446 0. r
  • 6% 0.9434 0.8900 0.8396 0.7921 0.7473 0.7050 0.6651 0.6274 0.5919 0.
  • 7% 0.9346 0.8734 0.8163 0.7629 0.7130 0.6663 0.6227 0.5820 0.5439 0.
  • 8 % 0.9259 0.8573 0.7938 0.7350 0.6806 0.6302 0.5835 0.5403 0.5002 0.
  • 9% 0.9174 0.8417 0.7722 0.7084 0.6499 0.5963 0.5470 0.5019 0.4604 0.
  • 10% 0.9091 0.8264 0.7513 0.6830 0.6209 0.5645 0.5132 0.4665 0.4241 0.
  • 1 1% 0.9009 0.8116 0.7312 0.6587 0.5935 0.5346 0.4817 0.4339 0.3909 0.
  • 12% 0.8929 0.7972 0.7118 0.6355 0.5674 0.5066 0.4523 0.4039 0.3606 0.
  • 13% 0.8850 0.7831 0.6931 0.6133 0.5428 0.4803 0.4251 0.3762 0.3329 0.
  • 14% 0.8772 0.7695 0.6750 0.5921 0.5194 0.4556 0.3996 0.3506 0.3075 0.
  • 15% 0.8696 0.7561 0.6575 0.5718 0.4972 0.4323 0.3759 0.3269 0.2843 0.
  • 16% 0.8621 0.7432 0.6407 0.5523 0.4761 0.4104 0.3538 0.3050 0.2630 0.
  • 17% 0.8547 0.7305 0.6244 0.5337 0.4561 0.3898 0.3332 0.2848 0.2434 0.
  • 18% 0.8475 0.7182 0.6086 0.5158 0.4371 0.3704 0.3139 0.2660 0.2255 0.
  • 19% 0.8403 0.7062 0.5934 0.4987 0.4190 0.3521 0.2959 0.2487 0.2090 0.17
  • 20% 0.8333 0.6944 0.5787 0.4823 0.4019 0.3349 0.2791 0.2326 0.1938 0.
  • 21% 0.8264 0.6830 0.5645 0.4665 0.3855 0.3186 0.2633 0.2176 0.1799 0.
  • 22% 0.8197 0.6719 0.5507 0.4514 0.3700 0.3033 0.2486 0.2038 0.1670 0.
  • 23% 0.8130 0.6610 0.5374 0.4369 0.3552 0.2888 0.2348 0.1909 0.1552 0.
  • 24% 0.8065 0.6504 0.5245 0.4230 0.3411 0.2751 0.2218 0.1789 0.1443 0.
  • 25% 0.8000 0.6400 0.5120 0.4096 0.3277 0.2621 0.2097 0.1678 0.1342 0.