Revision Test 2 FMP Question 1 – 17 marks Chapter 7 Capital Budgeting – End of chapter questions 15 – 20 Question 2 – 8 marks – EOQ question – Management.

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Revision Test 2 FMP Question 1 – 17 marks Chapter 7 Capital Budgeting – End of chapter questions 15 – 20 Question 2 – 8 marks – EOQ question – Management of Working Capital Chapter 4 – Self Test 4 and 5 and end of chapter questions 15 – 20 Question 3 – 9 marks Management of Working Capital Chapter 4 – Self Test 1 and 2 – end of chapter questions 2-10 Question 4 - 10 marks Financial Analysis Chapter 5 Question 15 -17 plus Question 5 June 2009 final paper and Question 5 November 2009 final paper Question 5 – 6 marks Financial Analysis Chapter 5 Question 15 -17 plus Question 5 June 2009 final paper and Question 5 November 2009 final paper

Today’s class Work Question 20 Chapter 7 page 295 – plus what criteria would you set for NPV – answer must be positive, IRR must be greater than Weighted average cost of capital Work question 17 page 137 Chap 4 Work question 3 (b) Page 132 Chap 4 Work question 17 page 220 Chapter 5 Plus extra question similar to Nov 2009 as follows: Company Ltd has an after-tax profit of $500,000 with 800,000 $2 ordinary shares fully paid. The dividend payout ratio is 60% and the price/earnings ratio is 20:1. Calculate the following: Share price (3 marks) Earnings yield (3 marks) Dividend yield (3 marks)

Question 20 Chapter 7 page 295 next slide

Question 17 page 137 Chap 4

Question 3 (b) Page 132 Chap 4

Question 17 page 220 Chapter 5

Question similar to Nov 2009 Company Ltd has an after-tax profit of $500,000 with 600,000 $2 ordinary shares fully paid. The dividend payout ratio is 60% and the price/earnings ratio is 20:1. Calculate the following: Share price (3 marks) Earnings yield (3 marks) Dividend yield (3 marks)

Company Ltd has an after-tax profit of $500,000 with 600,000 $2 ordinary shares fully paid. The dividend payout ratio is 60% and the price/earnings ratio is 20:1. Share price (3 marks) Earnings per Share = 500,000 / 600,000 = 83 cents per share PER = 20 / 1 = MP / E.P.S. – so Market price must be 20 x .83 = $16.67 Earnings yield (3 marks) EPS / MP = .83 / 16.67 = 5% Dividend yield (3 marks) Div Per Share = .83 x .6 (payout ratio) = 50 cents per share .50 / 16.67 = .03 = 3% OR 5% x 60% payout ratio = 3%