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1.Bogart Traders Statement of Financial Position for 2018 and 2017 financial years are below: Assets 2018 2017 Non-current Assets 5 000 000 4 700 000 Inventory 600 000 700 000 Receivables 300 000 320 000 Cash 300 000 100 000 6 200 000 5 820 000 29 BACHELOR OF COMMERCE: ACCOUNTING YEAR 3 - ACADEMIC AND ASSESSMENT CALENDAR (RD) Equity and Liabilities Share Capital (R2 shares) Share Premium Retained Income Long term Debt Payables 2018 2 400 000 600 000 550 000 2 000 000 650 000 6 200 000 2017 2 200 000 200 000 400 000 2 100 000 920 000 5 820 000
Additional information 1. Bogart's shares are currently trading at R3.20 per share. Replacement cost of assets is R6 000 000. 2. Their abbreviated Statement of Comprehensive Income for the year ended 2018: Sales (75% on credit) 2 000 000 Cost of sales (all purchases on credit) 850 000 Depreciation 80 000 Interest expense 90 000 Tax (30%) 160 000 Net Income after tax 300 000 Dividends 150 000 Retained Income 150 000 2.1 2.2 Calculate the current ratio for 2018 and comment. (The ratio for 2017 was 1.22:1) (4) Calculate the debtors' collection period for the current year. Note: Debtors terms: 60 days net. The ratio for 2017 was 66 days. (4) Calculate the following ratios for 2018: 2.3.1 Earnings per share (2) 2.3
2.4 2.3.2 Dividends per share. Would shareholders be happy with this dividend? Explain? (3) Calculate the Market to Book Ratio and explain the relevance of this ratio to decision makers. (4) Calculate the Price Earnings ratio for 2018 and explain the significance of this ratio. (3) 2.5

2.Asbestos company belongs to a risk class of which the appropriate capitalization rate is 15 percent. It currently has 1,00,000 shares selling at Tk. 100 each. The firm is contemplating the declaration of a Tk. 8 dividend at the end of the current financial year, which has just begun. Answer the following questions based on M-M model :

I. What will be the price of the shares at the end of the year, if the dividend is not declared and if the dividend is declared?

II. Assuming that the firm pays dividend and has a net income of Tk. 20 lacs and makes new investment of Tk. 40 lacs during the period, how many new shares must be issued?

III. Calculate the value of the company if the dividend is declared & not declared and interpret the result.

3.Capital Expenditure Data of Bennett Company: Particulars Project A Project B Initial Investment $ 42,000 $ 45,000 Operating Cash Inflows: Year 1 $ 14,000 $ 28,000 2 $ 14,000 $ 12,000 3 $ 14,000 $ 10,000 4 $ 14,000 $ 10,000 5 $ 14,000 $ 10,000 Cost of Capital 10% Calculate PBP, NPV and IRR of each project. As a financial analyst of the company which project would you like to suggest and why?