1. 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 marks Financial Analysis Chapter 5 Question plus Question 5 June 2009 final paper and Question 5 November 2009 final paper
Question 5 – 6 marks Financial Analysis Chapter 5 Question plus Question 5 June 2009 final paper and Question 5 November 2009 final paper

2. 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)

3. Question 20 Chapter 7 page 295 next slide

5. Question 17 page 137 Chap 4

6. Question 3 (b) Page 132 Chap 4

7. Question 17 page 220 Chapter 5

8. 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)

9. 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 / = 5%
Dividend yield (3 marks)
Div Per Share = .83 x .6 (payout ratio) = 50 cents per share
.50 / = .03 = 3% OR 5% x 60% payout ratio = 3%