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NEW QUESTION 20
An entity prepares financial statements to 31 December each year. The following data applies:
1 December 20X0
* The entity purchased some inventory for $400,000.
* In order to protect the inventory against adverse changes in fair value the entity entered into a futures contract to sell the inventory for a fixed price on 31 January 20X1.
* The entity designated this contract as a fair value hedge of the value of the inventory.
31 December 20X0
* The inventory had a fair value of $480,000 and the futures contract had a fair value of $75,000 (a financial liability).
What will be the impact on the statement of profit or loss and other comprehensive income for the year ended 31 December 20X0 in respect of the change in the value of the inventory and the futures contract?
- A. A net gain of $5,000 will be recognised in profit or loss.
- B. A loss of $75,000 will be recognised in other comprehensive income.
- C. A loss of $75,000 will be recognised in profit or loss.
- D. A net gain of $5,000 will be recognised in other comprehensive income.
Answer: A
NEW QUESTION 21
RST wishes to raise at least $40 million of new equity by issuing up to 10 million new equity shares at a minimum price of $3.00 under an offer for sale by tender. It receives the following tender offers:
What is the maximum amount that RST can raise by this share issue?
(Give your answer to the nearest $ million).
- A. 0
- B. 1
Answer: B
Explanation:
NEW QUESTION 22
Company WWW is identical in all operating and risk characteristics to Company ZZZ. but their capital structures differ. Company WWW and Company ZZZ both pay corporate income tax at 20%
Company WWW has a gearing ratio (debt: equity) of 1:3 Its pre-tax cost of debt is 6%.
Company ZZZ Is all-equity financed. Its cost of equity is 15%
What is the cost of equity tor Company WWW?
- A. 17.7%
- B. 17.0%
- C. 17.4%
- D. 18.0%
Answer: B
NEW QUESTION 23
Company T is a listed company in the retail sector.
Its current profit before interest and taxation is $5 million.
This level of profit is forecast to be maintainable in future.
Company T has a 10% corporate bond in issue with a nominal value of $10 million.
This currently trades at 90% of its nominal value.
Corporate tax is paid at 20%.
The following information is available:
Which of the following is a reasonable expectation of the equity value in the event of an attempted takeover?
- A. $32.0 million
- B. $41.6 million
- C. $50.2 million
- D. $65.0 million
Answer: B
NEW QUESTION 24
Select the category of risk for each of the descriptions below:
Answer:
Explanation:
NEW QUESTION 25
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