Calculate the cost of investment to be included on consolidation of accounts.\
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Joe Bloggs acquires 21 million £1 shares (80%) of the ordinary shares of Biggs Ltd by offering a share for share exchange of two shares for every three shares acquired in Biggs and a cash payment of £1 per share payable three years later. Joe Bloggs's shares have a nominal value of £1 and a current market value of £2. The cost of capital is 10% and £1 receivable in 3 years can be taken as £0.75.\\nRequired\\nCalculate the cost of investment to be included on consolidation of accounts.\\nQuestion 5Answer\\n\\na.\\n£29.75m\\n\\n\\nb.\\n£78.75m\\n\\n\\nc.\\n£43.75m\\n\\n\\nd.\\n£49m
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- An investor purchases 1000 shares of a company at GHS20 per share using his own equity of GHS10,000 and borrowing the rest from his broker at 20% per annum. If all the shares were sold one year later at GH¢28.50, calculate (a) the amount of money borrowed from the broker (b) the return on his equity taking into consideration all brokerage fees paid amounting 2.5% of the value of investment both for buying and selling of investment. (c) Return on his investment.Adam purchases 1,200 shares of Beta Inc. at $22 per share [inclusive of commissions] and sells them after 1 year, during which time the stock also pays a dividend. The following information is also available: Sale price = $25 Leverage ratio = 1.5 Call money rate = 5% Dividend = $0.20 per share Commission = $0.03 per share Maintenance margin = 20% Assume that the interest on the loan and the dividend are both paid at the end of the year. Adam’s return on this investment is closest to: 18.52% 19.35% 22.39% 24.52% 28.52%In you cash account, you buy 100 shares of XYZ Corporation at a price of $10 per share. Two months later, XYZ pays a dividend $0.21 per share. You sell all 100 shares of XYZ three months later at a price of $12 per share. What is your capital gain on this trade?
- JPS plc's current share price is £3.63. An investor is wondering whether to buy shares in JPS or warrants in the company. The warrant has a duration of one year and allows the purchase of 20 JPS shares at an exercise price of £4.10. The cost of the warrant is £5.70. If the share price for JPS is £4.50 in a year's time what are the corresponding returns for buying JPS's shares and warrants on JPS's shares? JPS plc paid no dividend over this periodABC Holdings plans to sell 60,000 units, each unit consisting of a RM1,000 debenture and 15, 7-year warrants. Each warrant allows the holder to purchase one common-share at RM30. If the stock price goes to RM38 and all warrants were exercised, what is the total capital raised by ABCSCENARIO: AMO Limited purchases shares of BEMI Limited by investing 1,000,000.00 ZMW. The dividend received on these shares reflects in the profit and loss account of the company. Further, the workers of the company receive an annual bonus and the dividend amount is taken into account in calculating the overall bonus figure.A few years later, AMO Limited transfers the shares of BEMI Limited to CUMI Limited, which is a wholly owned subsidiary of AMOLimited. Post transferring of the shares, the dividends do not reflect in the accounts of AMO Limited. This leads to a reduction in the overall bonus amount figure. Is AMO Limited legally allowed to do so? Which legal theory needs to be mentioned here?
- Investor A makes a cash purchase of 100 shares of AB&C common stock for $78 a share.Investor B also buys 100 shares of AB&C but uses margin. Each holds the stock for one year,during which dividends of $9 a share are distributed. Commissions are 3 percent of the value ofa purchase or sale; the margin requirement is 75 percent, and the interest rate is 12 percentannually on borrowed funds. What is the percentage earned by each investor if he or she sellsthe stock after one year for (a) $69 and (b) $83? If the margin requirement had been 45 percent, what would have been the annual percentagereturns? What conclusion do these percentage returns imply?Blaze Ltd has decided to purchase shares with a nominal value of £110,000 (originally issued for £120,000) for £140,000. The purchase is to be funded out of distributable profits. The statement of financial position of Blaze Ltd immediately prior to the purchase of the shares is as follows: £ Net assets 950,000 Share capital (£1 shares) Share premium 500,000 250,000 Retained earnings 200,000 Required (a) (b) Prepare journal entries to give effect to the above transaction. Prepare the statement of financial position of Blaze Ltd immediately after the purchase. (c) Comment on the capitalisation of capital and revenue reserve of Blaze Ltd after the repurchase of its shares.HIJ acquired all shares and half of the loan stock in KLM whose net assets were revalued by £120,000 from £340,000 at the time. Goodwill arising was £24,000, and leverage in KLM was 25%. Calculate the investment in KLM in HIJ’s books.
- The capital structure of DCF Enterprises Inc. consists of 18 million shares of common stock and 1 million warrants. Each warrant gives its owner the right to purchase one share of common stock for an exercise price of $17. The current stock price is $26, and each warrant is worth $10. What is the new value of the company? What is the new stock price?an investo holds 500 shares in XYZ Ltd a qouted company which has been paying average divindeds of sh 2.00 per share per annum in recent years. The dividends are expected to gow at a rate of 15% per annum over the coming three years, then at a rate of 10% over the next three years and finally at rate of 5% per annum to perpertuity. Given that the cost of capital is 10% Determine the value of 500 shares in XYZ using the dividended growth modelRandall pic is a company that, during the year ended 31 December 2020, paid $25,000 debenture interest and paid an ordinary dividend of 8 pence per share on 1 million £1 ordinary shares. The retained profit for the year was $160,000. What was Randall pc's profit for the year? Select one: a.$215,000 $80,000 c.$240,000 d.$265,000
