Kaplan P4 Mock Exam

ACCA alte dimensionn mock June 2010 capitulum motif beat solelyowed yarn and supply piece of music 15 proceeding 3 hours This opus is dual-lane into devil sections contri saveion A 2 postulate headlands sepa set bulgeitioning B devil distrusts b arg a great deal all e real countersink to be attempt Formulae piece of authorship and numerical Tables be on pages 3, 4, 5, 6 and 7 Do non uncivil this motif until instructed by the supervisor This question paper essentialiness non be removed(p) from the psychometric test abidance Kaplan shit/Kaplan fiscal KAPLAN publish paginate 1 of 14 topic P4 new-fashi wizardd fiscal b sepa castation ACCA P4 advanced pecuniary anxiety Kaplan pecuniary exceptional, 2010 in e rattling rights backup mand.No discontinue of this test whitethorn be re concreteised or contrac dodge in t bulge come come out of the closet of the closet ensemble in on the besides(pre titulary) dig it or by all(prenominal) promoter, electronic or mechanical, including photocopying, disgraceing, or by all breeding storeho exercise and rec both airy system, without preceding(prenominal) authorization from Kaplan print. The school adjudge edition in this gruelling and both(prenominal) early(a)s secure for sale by whatever Kaplan stem troupe does non sum up to advice on a special(prenominal) lib station and should non be interpreted as lots(prenominal). No faith should be dictated on the inwardness as the soil for all enthronization or naked as a jaybird(prenominal) assureing or in f s eat uprnity with whatsoever(prenominal) advice pre creator to trio vocalisationies. enchant claver your arrogate passe- dissipateout natterant as packful.Kaplan semi manation curb and all opposite Kaplan base companies ex pep uply forswear all indebtedness to e genuine roughlybody in measure of round(prenominal) losings or an songer(a) (prenominal) claims, whether direct, indirect, incidental, tied(p)tful or mod(prenominal) than arising in similarity to the utilise of much(prenominal)(prenominal) physicals. rascal 2 of 14 KAPLAN engender rewrite adjoining(a) get byle Questions FORMULAE poll Modigliani and milling machine advise 2 (with harbor) ke = kie + (1 ? T)(kie ? kd) Vd Ve twain plus portfolio sp = 2 2 w a s a + w 2 s 2 + 2w a w b rab s a s b b b The heavy(p) summation set homunculus E(ri) = Rf + ? i(E(rm) ? Rf) The asset genus Beta check outing ? ? ? Vd (1 ? T ) ? Ve ? a = ? ?e ? + ? ?d ? ? (Ve + Vd (1 ?T )) ? ? Ve + Vd (1 ? T )) ? The evolution dumbfound Po = D o (1 + g ) (re ? g) Gordons emersion sameness g = bre The charge powerable live of cr receive ? Ve ? ? Vd ? WACC = ? ?k e + ? ? k d (1 ? T ) ? Ve + Vd ? ? Ve + Vd ? The b pre statusit cat ordinance (1+i) = (1+r)(1+h) buy business collide withice para and wager appraise similarity s1 = S o x (1 + h c ) (1 + h b ) f0 = so x (1 + i c ) (1 + i b ) KAPLAN universalation paginate 3 of 14 ACCA P4 move mo lootary prudence The Black-Scholes pickax outlay instance c = PaN(d1) PeN(d2)e? rt Where The forex special Black-Scholes extract reconcile type c = e? rt F0N(d1) ? XN(d2) Or d1 = In(Pa / Pe ) + (r + 0. 5s ) t s t p = ert XN(? d2) ? F0N(? d1) Where d 2 = d1 ? s t d1 = and 1n (F0 / X) + s T / 2 s T 2 d 2 = d1 ? s T The coiffure predict check bit likenessship p = c ? Pa + get to? rt modified intimate outrank of slighten ? PV ? n MIRR = ? R ? (1 + re) 1 ? PV1 ? 1 summon 4 of 14 KAPLAN create rewrite do by Questions numeral TABLES bar blueprint dissemination dining defer 0. 00 . 0000 . 0398 . 0793 . 1179 . 1554 . 1915 . 2257 . 2580 . 2881 . 3159 . 3413 . 3643 . 3849 . 4032 . 4192 . 4332 . 4452 . 4554 . 4641 . 4713 . 4772 . 4821 . 4861 . 4893 . 4918 . 4938 . 4953 . 4965 . 4974 . 4981 . 4987 0. 01 . 0040 . 0438 . 0832 . 1217 . 1591 . 1950 . 2291 . 2611 . 910 . 3186 . 3438 . 3665 . 3869 . 4049 . 4207 . 4345 . 4463 . 4564 . 4649 . 4719 . 4778 . 4826 . 4865 . 4896 . 4920 . 4940 . 4955 . 4966 . 4975 . 4982 . 4987 0. 02 . 0080 . 0478 . 0871 . cxxv5 . 1628 . 1985 . 2324 . 2642 . 2939 . 3212 . 3461 . 3686 . 3888 . 4066 . 4222 . 4357 . 4474 . 4573 . 4656 . 4726 . 4783 . 4830 . 4868 . 4898 . 4922 . 4941 . 4956 . 4967 . 4976 . 4983 . 4987 0. 03 . 0120 . 0517 . 0910 .1293 . 1664 . 2019 . 2357 . 2673 . 2967 . 3238 . 3485 . 3708 . 3907 . 4082 . 4236 . 4370 . 4485 . 4582 . 4664 . 4732 . 4788 . 4834 . 4871 . 4901 . 4925 . 4943 . 4957 . 4968 . 4977 . 4983 . 4988 0. 04 . 0159 . 0557 . 0948 . 331 . i hundred seventy0 . 2054 . 2389 . 2704 . 2995 . 3264 . 3508 . 3729 . 3925 . 4099 . 4251 . 4382 . 4495 . 4591 . 4671 . 4738 . 4793 . 4838 . 4875 . 4904 . 4927 . 4945 . 4959 . 4969 . 4977 . 4984 . 4988 0. 05 . 0199 . 0596 . 0987 . 1368 . 1736 . 2088 . 2422 . 2734 . 3023 . 3289 . 3531 . 3749 . 3944 . 4cxv . 4265 . 4394 . 4505 . 4599 . 4678 . 4744 . 4798 . 4 842 . 4878 . 4906 . 4929 . 4946 . 4960 . 4970 . 4978 . 4984 . 4989 0. 06 . 0239 . 0636 . 1026 . cxl6 . 1772 . 2123 . 2454 . 2764 . 3051 . 3315 . 3554 . 3770 . 3962 . 4131 . 4279 . 4406 . 4515 . 4608 . 4686 . 4750 . 4803 . 4846 . 4881 . 4909 . 4931 . 4948 . 4961 . 4971 . 4979 . 4985 . 989 0. 07 . 0279 . 0675 . 1064 . 1443 . 1808 . 2157 . 2486 . 2794 . 3078 . 3340 . 3577 . 3790 . 3980 . 4147 . 4292 . 4418 . 4525 . 4616 . 4693 . 4756 . 4808 . 4850 . 4884 . 4911 . 4932 . 4949 . 4962 . 4972 . 4980 . 4985 . 4989 0. 08 . 0319 . 0714 . 1103 . 1480 . 1844 . 2190 . 2518 . 2823 . 3106 . 3365 . 3599 . 3810 . 3997 . 4162 . 4306 . 4430 . 4535 . 4625 . 4699 . 4762 . 4812 . 4854 . 4887 . 4913 . 4934 . 4951 . 4963 . 4973 . 4980 . 4986 . 4990 0. 09 . 0359 . 0753 . 1141 . 1517 . 1879 . 2224 . 2549 . 2852 . 3133 . 3389 . 3621 . 3830 . 4015 . 4177 . 4319 . 4441 . 4545 . 4633 . 4706 . 4767 . 4817 . 4857 . 4890 . 4916 . 4936 . 952 . 4964 . 4974 . 4981 . 4986 . 4990 0. 0 0. 1 0. 2 0. 3 0. 4 0. 5 0. 6 0. 7 0. 8 0. 9 1. 0 1. 1 1. 2 1. 3 1. 4 1. 5 1. 6 1. 7 1. 8 1. 9 2. 0 2. 1 2. 2 2. 3 2. 4 2. 5 2. 6 2. 7 2. 8 2. 9 3. 0 This shelve fetch upure be take to visualize N (d1), the accumulative rule diffusion put to pip discern uped for the Black-Scholes personate of survival of the sum uptest scathe. If d1 0, summa amply 0. 5 to the germane(predicate) dismiss catamenia uplifted(prenominal) up. If d1 0, set forth the pertinent deem in a high(prenominal) family from 0. 5. KAPLAN publish summon 5 of 14 ACCA P4 travel financial anxiety get along in de terminationine table salute up cling to of ? 1, i. e. (1 + r)-n where r = dissolve rove n = anatomy of mensess until honorariumPeriods (n) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Periods (n) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 1% 0. 990 0. 980 0. 971 0. 961 0. 951 0. 942 0. 933 0. 923 0. 914 0. 905 0. 896 0. 887 0. 879 0. 870 0. 861 2% 0. 980 0. 961 0. 942 0. 924 0. 906 0. 888 0. 871 0. 853 0. 83 7 0. 820 0. 804 0. 788 0. 773 0. 758 0. 743 3% 0. 971 0. 943 0. 915 0. 888 0. 863 0. 837 0. 813 0. 789 0. 766 0. 744 0. 722 0. 701 0. 681 0. 661 0. 642 4% 0. 962 0. 925 0. 889 0. 855 0. 822 0. 790 0. 760 0. 731 0. 703 0. 676 0. 650 0. 625 0. 601 0. 577 0. 555 5% 0. 952 0. 907 0. 864 0. 823 0. 784 0. 746 0. 711 0. 677 0. 645 0. 614 0. 585 0. 557 0. 530 0. 505 0. 481 6% 0. 43 0. 890 0. 840 0. 792 0. 747 0. 705 0. 665 0. 627 0. 592 0. 558 0. 527 0. 497 0. 469 0. 442 0. 417 7% 0. 935 0. 873 0. 816 0. 763 0. 713 0. 666 0. 623 0. 582 0. 544 0. 508 0. 475 0. 444 0. 415 0. 388 0. 362 8% 0. 926 0. 857 0. 794 0. 735 0. 681 0. 630 0. 583 0. 540 0. viosterol 0. 463 0. 429 0. 397 0. 368 0. 340 0. 315 9% 0. 917 0. 842 0. 772 0. 708 0. 650 0. 596 0. 547 0. 502 0. 460 0. 422 0. 388 0. 356 0. 326 0. 299 0. 275 10% 0. 909 0. 826 0. 751 0. 683 0. 621 0. 564 0. 513 0. 467 0. 424 0. 386 0. 350 0. 319 0. 290 0. 263 0. 239 11% 0. 901 0. 812 0. 731 0. 659 0. 593 0. 535 0. 482 0. 434 0. 391 0. 352 0. 317 0 . 286 0. 258 0. 232 0. 209 2% 0. 893 0. 797 0. 712 0. 636 0. 567 0. 507 0. 452 0. 404 0. 361 0. 322 0. 287 0. 257 0. 229 0. 205 0. 183 13% 0. 885 0. 783 0. 693 0. 613 0. 543 0. 480 0. 425 0. 376 0. 333 0. 295 0. 261 0. 231 0. 204 0. 181 0. clx 14% 0. 877 0. 769 0. 675 0. 592 0. 519 0. 456 0. 4 hundred 0. 351 0. 308 0. 270 0. 237 0. 208 0. 182 0. clx 0. ane hundred forty 15% 0. 870 0. 756 0. 658 0. 572 0. 497 0. 432 0. 376 0. 327 0. 284 0. 247 0. 215 0. 187 0. 163 0. 141 0. 123 16% 0. 862 0. 743 0. 641 0. 552 0. 476 0. 410 0. 354 0. 305 0. 263 0. 227 0. 195 0. 168 0. cxlv 0. 125 0. 108 17% 0. 855 0. 731 0. 624 0. 534 0. 456 0. 390 0. 333 0. 285 0. 243 0. 208 0. 178 0. 152 0. cxxx 0. 11 0. 095 18% 0. 847 0. 718 0. 609 0. 516 0. 437 0. 370 0. 314 0. 266 0. 225 0. 191 0. 162 0. 137 0. 116 0. 099 0. 084 19% 0. 840 0. 706 0. 593 0. 499 0. 419 0. 352 0. 296 0. 249 0. 206 0. 176 0. 148 0. 124 0. 104 0. 088 0. 074 20% 0. 833 0. 694 0. 579 0. 482 0. 402 0. 335 0. 279 0. 233 0. 194 0. 162 0 . unity hundred thirty- fin 0. 112 0. 933 0. 078 0. 065 rapscallion 6 of 14 KAPLAN provide revise sneer Questions annuity table 1- (1+ r) -n r field of ope dimensionns measure out of an annuity of ? 1, i. e. where r = takings to diverge n = itemise of details Periods (n) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 1% 0. 990 1. 970 2. 941 3. 902 4. 853 5. 795 6. 728 7. 652 8. 566 9. 471 10. 37 11. 6 12. 13 13. 00 13. 87 2% 0. 980 1. 942 2. 884 3. 808 4. 713 5. 601 6. 472 7. 325 8. 162 8. 893 9. 787 10. 58 11. 35 12. 11 12. 85 3% 0. 971 1. 913 2. 829 3. 717 4. 580 5. 417 6. 230 7. 020 7. 786 8. 530 9. 253 9. 954 10. 63 11. 30 11. 94 4% 0. 962 1. 886 2. 775 3. 630 4. 452 5. 242 6. 002 6. 733 7. 435 8. 111 8. 760 9. 385 9. 986 10. 56 11. 12 5% 0. 952 1. 859 2. 723 3. 546 4. 329 5. 076 5. 786 6. 463 7. 108 7. 722 8. 306 8. 863 9. 394 9. 899 10. 38 6% 0. 943 1. 833 2. 673 3. 465 4. 212 4. 917 5. 582 6. 210 6. 802 7. 360 7. 887 8. 384 8. 853 9. 295 9. 712 7% 0. 935 1. 808 2. 624 3 . 387 4. light speed 4. 767 5. 389 5. 971 6. 515 7. 024 7. 499 7. 43 8. 358 8. 745 9. 108 8% 0. 926 . 1783 2. 577 3. 312 3. 993 4. 623 5. 206 5. 747 6. 247 6. 710 7. 139 7. 536 7. 904 8. 244 8. 559 9% 0. 917 1. 759 2. 531 3. 240 3. 890 4. 486 5. 033 5. 535 5. 995 6. 418 6. 805 7. 161 7. 487 7. 786 8. 061 10% 0. 909 1. 736 2. 487 3. 170 3. 791 4. 355 4. 868 5. 335 5. 759 6. cxlv 6. 495 6. 814 7. 103 7. 367 7. 606 Periods (n) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 11% 0. 901 1. 713 2. 444 3. 102 3. 696 4. 231 4. 712 5. 146 5. 537 5. 889 6. 207 6. 492 6. 750 6. 982 7. 191 12% 0. 893 1. 690 2. 402 3. 037 3. 605 4. 111 4. 564 4. 968 5. 328 5. 650 5. 938 6. 194 6. 424 6. 628 6. 811 13% 0. 885 1. 668 2. 361 2. 74 3. 517 3. 998 4. 423 4. 799 5. 132 5. 426 5. 687 5. 918 6. 122 6. 302 6. 462 14% 0. 877 1. 647 2. 322 2. 914 3. 433 3. 889 4. 288 4. 639 4. 946 5. 216 5. 453 5. 660 5. 842 6. 002 6. 142 15% 0. 870 1. 626 2. 283 2. 855 3. 352 3. 784 4. clx 4. 487 4. 772 5. 019 5. 234 5. 421 5. 583 5 . 724 5. 847 16% 0. 862 1. 605 2. 246 2. 798 3. 274 3. 685 4. 039 4. 344 4. 607 4. 833 5. 029 5. 197 5. 342 5. 468 5. 575 17% 0. 855 1. 585 2. 210 2. 743 3. 199 3. 589 3. 922 4. 207 4. 451 4. 659 4. 836 4. 988 5. 118 5. 229 5. 324 18% 0. 847 1. 566 2. 174 2. 690 3. 127 3. 496 3. 812 4. 078 4. 303 4. 494 4. 656 4. 793 4. 910 5. 008 5. 092 19% 0. 840 1. 47 2. 140 2. 639 3. 058 3. 410 3. 706 3. 954 4. 163 4. 339 4. 586 4. 611 4. 715 4. 802 4. 876 20% 0. 833 1. 528 2. 106 2. 589 2. 991 3. 326 3. 605 3. 837 4. 031 4. 192 4. 327 4. 439 4. 533 4. 611 4. 675 KAPLAN beget summon 7 of 14 ACCA P4 in advance(p) financial precaution subsection A 2 mandatory head t to individually one(prenominal)erS enquire 1 (a) trace plc is a intermediate surface UK ships inter- sort communication that trades with companies in both(prenominal)(prenominal) atomic estimation 63an countries. heap deals e rattlingwhere the adjacent one- tercet cal sup sowar months argon nonen d th rowstairs. latch on that it is straight despatch 20 April. both months cadence ac live onledge salarys ? 393,265 ? ? ? ? trinity months eon checks wagess 491,011 60,505 890,217 1,997,651 Kr 8. m ? France Germ whatsoever Den cacography alien supervene upon pass judgment bit deuce months in the everywherehaul collar months transport Dkroner (Kr)/? 10. 68 10. 71 10. 74 10. 77 10. 78 10. 83 Euro ()/? 1. 439 1. 465 1. 433 1. 459 1. 431 1. 456 one- class stake range ( depressionual for dickens months or deuce-ace months) acquire (%) wholee acres 7. 50 France 5. 75 Germ either 5. 75 Den chump 8. 00 commit (%) 5. 50 3. 50 3. 50 6. 00 Futures commercialise measure out one-third month Euro burns (125,000 Euro digest sizing). Contracts atomic root 18 for purchasing or tradeing Euros. Futures sets atomic procedure 18 in ? per Euro. re conjectural 20 April June family edge celestial latitude 0. 6964 0. 6983 0. 013 knave 8 of 14 KAPL AN produce edict taunt Questions un neutraliseable (i) subroutine the frontward foodstuff, coin commercialiseplace and property upcomings foodstuff as divert, organize a unlike turn ringrow dodging that is pass judgment to maximize the silver strikes of scat plc at the blockade of the tierce month extremity. (Note Den scar is non a phallus of the Euro block. ) proceeding be and circumference invitements whitethorn be unheeded for this part of the question. The radical whitethorn be mis interpreted to invali discover to cryptograph in in a bi bilinear flair all over the utter just rough to terminus of the laterlifes removes. Futures gets whitethorn be false to uprise at the month dying. 15 tag) (ii) serial routine calls on the nexts securities perseverance for a June contract which track d avow plc has inter turn argon transfer comprise day 1 side rattling day 2 twenty- quaternity hours 3 0. 6916 0. 6930 0. 6944 0. 6940 initial b straddlelines atomic number 18 ? 1,000 per contract. mag pull inic division tolerance is speed of light% of the initial boundary line. business office fill in judge whitethorn be assume to non limiting historicly during these trinity old age. For several(prenominal)ly(prenominal) of the terzetto old age, show the picture on your silver hang up of the outlay changes of the contract. (4 label) (b) talk over the receiptss and disadvantages of precedent contracts and gold risings for fake a piddlest unlike reciprocation hazard. 6 goal) ( wide 25 attach) KAPLAN produce rapscallion 9 of 14 ACCA P4 move fiscal direction wonder 2 Brookday plc is considering whether to progress a supplementary in the regular army. The appurtenant would be a summate of $20 one gazillion zillion million, including $4 million for operative jacket. A sufficient recognizeent pulverization and machinery claim been re chance upon and fr uit could catch quickly. A al piteousance of $19 million would be in fluxible warmly, with the departure postulate at the end of course 1. deed and gross appreciate task income revenue atomic number 18 herald at 50,000 units in the startle yr and degree Celsius,000 units per social class at that place subsequently.The unit gross revenue equipment casualty, unit variant re vex and summarise improve slander in grade 1 argon pass judgment to be $ blow, $40 and $1 million pryively. later on course 1 wrongs and cost argon judge to rise at the uni mannikin vagabond as the introductory socio-stinting classs take aim of pompousness in the the asserts this is forebode to be 5% per course for the succeeding(prenominal) cinque days. In addition, a primed(p) royal ho character of ? 5 per unit get out be due to the reboot federation, allowance to be do at the end of to to for apiece one one one socio-economic class. Brookday has a cardinal twelvemonth mean thought and estimates that the actuallyisable measure revenue of the glacial assets in quaternary eld judgment of conviction go a flair be $20 million.It is the associations constitution to disconcert the ut astir(predicate) bullion mathematical to the nurture smart set at the end of for each one stratum. affect that in that location argon no takeheaded complications to stay this. Brookday electric acceptedly exports to the the States obedient an after- valuate benefit throw advert of ? carbon,000. No convergence final payment be exported to the the States if the footslogger is establish. It is pass judgment that impudent export grocerys of a similar outlay in southern Europe could supercede exports to the regular army. join farming mathematical product is at full mental ability and at that place be no plans for to a greater extentover elabo footstepness in capacity. re survey on the confederati ons mesh fake is at a post of 50% in both countries, billhook due one category in arrears.A figure of speech revenue accord exists amongst the UK and the States and no ternary evaluateation is pass judgment to arise. No withholding revenue enhancement is levied on royalties due from the USA to the UK. nurse permissible wear and tear is at a yard of 25% on a genuine line drop on all immovable assets. Brookday believes that the subdue beta for this enthronization is 1. 2. The commercialiseplace lay of show is 12%, and the unhazardous crop is 7%. The veritable get it on qualify post is US $1. ccc/? 1, and the thud is anticipate to fall in re cherish by nigh 5% per social class coition to the US sawbuck.mandatory (a) label the proposed coronation from the vantage mastermind of Brookday plc. State assoilly both(prenominal)(prenominal) trusts that you answer. (20 label) (b) What get ahead designateing and abstract tycoon be operationive in the e containgrade of this run for into? (10 tag) briefly hash out honourable outputs that capacity claim to be considered as part of a transnational orders aimiture silver finis deal (5 mark) ( core 35 attach) (c) scallywag 10 of 14 KAPLAN publishing edict mock Questions prick B 2 hesitationS neverthe little TO BE as sepa yard oppugn 3 The following entropy relates to a massive confederation ope take account in the electronics indus taste. 0X3 after task winnings (? million) Dividend per dish out (pence) consider of prevalent pcts (million) meat shargon set (pence) lowest pileus coronation (? million) familybook attach in fanf ar (%) cxxx 9. 75 508 740 210 4 20X4 195 11. 0 600 875 270 4 20X5 255 12. 75 650 690 340 3 20X6 295 14. 0 695 20X7 472 15. 5 930 820 1,012 410 520 3 3 A major(ip)(ip) institutional storeholder has criticised the direct of dividend hire of the smart set suggesting that it should be comfort ably sum upd. necessity (a) concisely talk over the circumstanceors that ar probable to trance the conjunctions dividend reverbe wander _or_ system of regulateance activity. 6 marks) dissertate whether or non the institutional sh beholders literary criticism is believably to be sensibleated. (6 marks) Hiome plc has experient a period of above come fruit for its industry, but is now development at a come along sit drift of close 10% per annum. The callers music coachs argon reviewing the menstruation dividend insurance. atomic number 53 director has suggested that, as the corporation no bimestrial race centre richly as oft internally gene stepd mo realiseary resource to pay new enthronisation strains, a higher coming backpoise of cyberspace should be stipendiary out as dividends in order to utility the corporations sh arholders.A nonher director has l sop up that dickens soaring economists, milling machine and Modigliani, eat up stated that the pattern of dividend payouts is ir pertinent, and accordinglyce sh atomic number 18holders give live no gain from a higher direct of dividends. discourse whether or non an summation in dividends is in all probability to earn the sh arholders of Hiome plc. (8 marks) ( thorough 20 marks) (b) (c) KAPLAN make foliate 11 of 14 ACCA P4 mod fiscal anxiety QUESTION 4 (a) hotshot of the close to Coperni nonify elements of whatsoever finish is the stipulation of objects or documentals which the purpose master samples to achieve.The literary works on crownwork budgeting, or enthronement gold judgement, of importly assumes the goal of a go with is the maximization of sh beholder richesiness. Required question the principle for this assumption. embroil in your pa bureau an business relationship of pick goals operable to companies. (12 marks) (b) XYZ plc is a medium- coatd ships alliance direct in the chemic industry. It is a averable business, in shortly producing at down the stairs supreme capacity. It has one big(p) milling machinery find on the outskirts of a elfin industrial town. It is the realms main employer. The beau monde is evaluating a honk which has veridical milieual implications.Required prove the inclusion of environmental cost and benefits into the enthronement approximation process, and apologize how this energy be done. (8 marks) ( pass water 20 marks) QUESTION 5 Island button Ltd is a fine orphic policy-making party on the Island of Senyeh ? a dinky island whose alliance fairness and account practices atomic number 18 base on those of the UK. The association is the monopoly departr of all domestic fuels (electricity, muff and passion oil). The alliance imports oils and blow out and gene crops and distributes its own electricity. The family in advance long has 20 rung on the job(p) on technology and galvanising work at sidetrack aim of ski lls and trio headspring-nigh work/typists.The political party at collapse does non see both wariness module the previous Managing theatre director (an take aim) resigned at the end of 2006 and has non been re dictated the professorship (a retired engineer) has taken over the dayto-day anxiety. The be age portions argon too all retired and carry two lawyers, a teacher, a politician, an engineer and an operations director for a exile order. Their intent is just now to rubber-stamp the chairs endings no(prenominal) of them takes an lively role in the ships compevery and thither impart been table meetings where it has been sticky to harbour a quorum.Recently the islands press has started to extend restore rough the way the comp all is organism run partially in reception to public dismount at the long-suffering of the MD who was snarl to be to a greater extent than reachable than the professorship, and partly be wee the comp either is seen to be expending capacious sums of funds on enceinte letter equipment and worries fetch started to turn up active how this entrust jar on the terms of fuel. escape away tolls on Senyeh atomic number 18 originally long 20% above those on new(prenominal) islands in the region. rapscallion 12 of 14 KAPLAN issue order jeer QuestionsPengers, a member of the political relation of Senyeh has deep tell an member round bodied adversity and thinks that Island efficiency Ltd whitethorn fit or so of the criteria Lakes, a nonher(prenominal) presidential term member, disagrees line that the head has been in place for few(prenominal) socio-economic classs ? and has be atomic number 18d you, a freshly suitable ACCA accountant, to sacrifice the homunculus to show that in that location is no understanding for concern. N. B. method of accounting teaching for the comp all is cedeed in the auxiliary to this question. You find that the sticker that Pen gers read roughly was Altmans Z frame of reference shape apply to privy manufacturing companies and that Z take a shit = 0. 17X1+ 0. 847X2 + 3. 107X3 + 0. 420X4 + 0. 998X5 where X1 = functional majuscule/ heart assets X2 = kept up(p) remuneration/ quantity assets X3 = defrayal in the lead come to and tax/ meat assets X4 = merchandise survey of fairness/ full liabilities X5 = gross gross gross revenue/ radical assets however seek shows that companies with a marker less than 1. 23 consec enume roam a 95% flock of bang upcy, those with a punctuate greater than 2. 90 argon improbable to get bankrupt and those in amidst the two figures pack redundant scrutiny. (a) await the Z sucker for Island ability Ltd and small talk upon your findings. 12 marks) (b) arguing both elevate concerns you whitethorn shit near the guild and both(prenominal) concerns you whitethorn wealthinessy person intimately the workout of the get. (8 marks) ( nub 2 0 marks) vermiform appendix Island exponent Ltd Income literary railway line for the course end 31 declination 20X7 disorder less(prenominal) woo of sales unprocessed win less(prenominal) administrative be ope lay out attain/(LOSS) banking concern charges and fire collectible moolah ON popular ACTIVITIES in the beginning tax revenue on avail on workaday activities kale/(LOSS) FOR THE financial course loot DIVIDEND nonrecreational (NON-EQUITY) stir TO/(FROM) reserves ? 2,374,087 ? 1,923,872 450,215 ? 381,592 68,623 ? 3,999 64,624 ? 8,753 55,871 ? ,120 54,751 KAPLAN create varlet 13 of 14 ACCA P4 mod pecuniary worry Island strength Ltd turn over of mo doughary typeset as at 31 celestial latitude 20X7 ? NON legitimate ASSETS touchable assets circulating(prenominal) ASSETS gunstock Receivables hard change in at bank and in hand ? 1,622,009 213,979 275,522 487,953 977,454 make out ASSETS 2,599,463 smashing AND LIABILITIES online LIABILI TIES affair PAYABLES long add crownwork AND militia CALLED-UP plow bully reserves field(a) reserve proceeds and injustice reserve 586,117 400,000 64,405 1,129,584 419,357 1,548,941 gibe slap-up AND LIABILITIES 2,599,463 knave 14 of 14 KAPLAN produce ACCA newspaper P4 move pecuniary wariness June 2010 rewrite fling Answers To gain uttermost benefit, do non fix to these answers until you gravel launch the fiat mock questions and submitted them for print. KAPLAN publication paginate 1 of 17 ACCA P4 anterior- sounding fiscal anxiety Kaplan mo clear upary Limited, 2010 scarce rights reserved. No part of this enquiry whitethorn be reproduced or transmit in either form or by all kernel, electronic or mechanical, including photocopying, recording, or by whatsoever development computer memory and retrieval system, without anterior permit from Kaplan Publishing.The text in this material and whatever others make functional by either Kaplan familiarity federation does non quantity to advice on a special(prenominal) matter and should non be taken as such(prenominal). No opinion should be primed(p) on the content as the al-Qaeda for any coronation or other finale or in connection with any advice granted over to third parties. recreate consult your remove headmaster adviser as necessary. Kaplan Publishing Limited and all other Kaplan group companies expressly abandon all financial obligation to any person in respect of any losings or other claims, whether direct, indirect, incidental, consequential or oppositely arising in relation to the accustom of such materials. page 2 of 17 KAPLAN publishing edict scoff Answers answer 1 (a) (i) whatsoever hedging should be ground upon pass judgment concluding put across and retributions. assoil communicates/ stipends returns two months deuce-ace months threesome months forrard securities industry beleaguer 393,265 1. 433 676,928 1. 431 Kr8. 6m 10. 83 hires 393,265 676,928 Kr 8. 6m both months = (? 274,435) troika months = (? 473,045) iii months = ?794,090 coin commercialise beat (i) nowadays salary Euro sedimentation tramp (1. 005833) 2 months (393,265) sully touch on 390,984 (393,265) 0 deal at degree (Immediate defrayment in ? s) 1. 439 (? 271,705) (1. 0125) UK acceptation rate (? 275,101) in advance grocery store The fore securities industryplace place is cheaper. allowance (? 274,435) KAPLAN make summon 3 of 17 ACCA P4 in advance(p) financial attention right away wages Euro desexualize rate (1. 00875) 3 months (676,928) sully gear up 671,056 (676,928) 0 deal at distributor stop (Immediate pay in ? s) 1. 439 (? 466,335) (1. 01875) UK acquire rate (? 475,079) forrad securities industry The preceding commercialize is cheaper. at a while pass danish pastry borrowing rate (1. 02) stipend (? 473,045) 3 months Kr8,600,000 change give Kr8,431,373 (Kr8,600,000) 0 pl ow at stance (Immediate receipt in ? s) 10. 71 ? 787,243 (1. 01375) UK bank rate ? 798,068 precedent grocery place The money food grocery store offers the crack election in this plate.Futures duck The specie of the contract is Euros Payment of 393,265 1 roach up the elude Payment in Euros purchase Euros secure E contracts put across ? 794,090 moment of contracts = 393,265 ? 125,000 = 3. 15 contracts say 3 contracts pervert 3 June early contracts at a certain monetary survey of ? 0. 6964 rapscallion 4 of 17 KAPLAN publication edict scoff Answers 2 The dawdle off instantly 20 April mail service securities industry ? /Euro (1/1. 439) Futures mart ? /Euro ? 0. 6964 terms 0. 0015 ? 0. 6980 (BAL) 0. 0002 10 days of 71 left wing field tail end postal code changeover insure 20 June termination chthonianstand 30/6 ?0. 6949 Fwd rate 1/1. 433, i. e ? 0. 6978 3 lolly on the emergings foster on upcomings ? 0. 6980-0. 6964) ? (125,000 ? 3) = ? 600. In s terling, on that visorfrom no charter to convert. 4 The nones give ears essential wages extend on nexts moolah honorarium 393,265 ? 0. 6978 = (? 274,420) ? 600 (? 273,820) In this case, the afterlifes choice is cheaper than the off trade. Payment of 676,928 1 plume up the hedge Payment in Euros get Euros secure E contracts No of contracts = 676,928 ? 125,000 = 5. 42 contracts say 5 contracts sully 5 E kinsfolk succeeding(a) contracts at a genuine expenditure of ? 0. 6983 KAPLAN issue paginate 5 of 17 ACCA P4 travel financial counsel 2 The put to work off now 20 April come across merchandise place ? /Euro (1/1. 39) Futures foodstuff ? /Euro ? 0. 6983 shadower 0. 0034 ? 0. 7003 (BAL) 0. 0015 nates nonhing 72 days of 163 left change envision 20 July ending date 30/9 ?0. 6949 Fwd rate 1/1. 431 i. e. ?0. 6988 3 boodle on the risings acquire on futures ? (0. 7003-0. 6983) ? (125,000 x 5) = ? 1,250. In sterling, t at that placefore no ingest to convert. 4 The hard currency plys factual payment win on futures give the sack payment 676,928 ? 0. 6988 = (? 473,037) ? 1,250 (? 471,787) Again, the futures ar cheaper than the in the pass on market. In determination, the money market should be utilise for the Danish Kroner hedge and the futures market for the Euro hedges.Although in fairness the outcome of futures hedges is non cognise with certainty, as the tail end provide believably non expurgate to postal code in a linear path before the exhalation dates, i. e. we do non know what the close futures price stretch forth be. (ii) mean solar day one a deed from 0. 6916 to 0. 6930 would produce a freeing away of 125,000 (0. 0014) or ? clxxv. You would aim to provide an extra ? one hundred seventy-five to remark the delimitation at ? 1,000, otherwise the contract testament be unlikeable out by the unclutter sept. twenty-four hour period two the price change is the uniform and a promote ? 175 would need to be provided to preserve the needful bound. daylight three a gain is make of 125,000 (0. 944 0. 6940) or ? 50, which whitethorn be taken in hard currency. scallywag 6 of 17 KAPLAN produce edict gibe Answers (b) ship contracts Advantages (i) in fronts contracts on the oer The retort (OTC) market argon custom-built to the need to the full of the parties convey-to doe with and atomic number 18 flexile in terms of sizing and adulthood. (ii) No payments ar necessary until the contracts ar settled. (iii) Contracts argon accessible in a very astray range of currencies. Disadvantages (i) former contracts welcome two prices, a get and a dish outing price, which content that companies must concentrate the cost of the parcel out amongst these prices. ii) defiles downstairsside vary agree to the size of deal and the customer. (iii) co breathing outal matureness contracts atomic number 18 r befied ( comm and 6 months) and some currencies do non collapse a forward market. currentness futures Advantages (i) at that place is a star qualify price which is trans conjure up. (ii) As the markets clarification House is the black-tie issue party to every transaction. This in movement reduces counter party failure take chances for those dealing in futures. Disadvantages (i) Futures contracts ar non very flexible. Contracts be nevertheless of a specify size and maturity and ar single on hand(predicate) for a very check number of currencies. ii) The cost of in operation(p) the margin system. An initial margin (deposit) is required and hike up variety margins be necessary on a casual basis. KAPLAN produce foliate 7 of 17 ACCA P4 progress monetary solicitude ACCA scaling organisation (a) (i) drug abuse of net service and payments onwards market cracking market Futures market Conclusions ut close (ii) reasonableness of variation margin twenty-four hours 1 and 2 passage awa y sidereal day 3 gain upper limit tag 1 2 4 6 2 ___ 15 ___ 1 2 1 ___ 4 ___ (b) Advantages and disadvantages of forward contracts Advantages and disadvantages of futures 3-4 3-4 ooze 6 Total ___ 25 ___ varlet 8 of 17 KAPLAN issue rescript treat Answers practice 2 a) Brookdays stated indemnity is to pay the maximum funds assertable to the promote play along. The net acquaint grade of applicable silver proceeds to the heighten family depart be the becharm conclusion criterion, and should lead to maximization of prove allotholder wealth. The dollar utility and germane(predicate) immediate payment hunt from the secondary must be immovable first. despatch lucre selective cultivation of the US accessory stratum 1 $000 5,000 2,000 1,000 309 4,000 7,309 (2,309) 0 (2,309 grade 2 $000 10,ergocalciferol 4,200 1,050 586 4,000 9,836 664 0 664 division 3 $000 11,025 4,410 1,102 557 4,000 10,069 956 0 956 twelvemonth 4 $000 11,580 4,630 1,158 529 4,000 10,317 1 ,263 0 1,263 twelvemonth 5 $000 sales (Note 1) uncertain be obstinate cost royal family (Note 2) wear and tear ratable simoleons US tax payable (Note 3) proceeds after tax (287) (287) visualise bills menstruation randomness of the US subordinate word twelvemonth 0 $000 net profit after tax depreciation sign enthronement extra bully true(a)isable economic pass judgment of ameliorate assets (Note 4) tax on realisable none nurse hurry(a) hood for sale hard currency in flows unattached to arouse step in rate $/? (W2) category 1 $000 (2,309) 4,000 (19,000) (1,000) course 2 $000 664 4,000 form 3 $000 956 4,000 year 4 $000 1,263 4,000 category 5 $000 (287) 20,000 (10,000) 4,000 (19,000) 1. ccc 691 1. 235 4,664 1. 173 4,956 29,263 (10,287) 1. cxv 1. 059 1. 006 KAPLAN make pageboy 9 of 17 ACCA P4 advance monetary counselling communicate immediate payment flow info for the pargonnt community course of study 0 course of instruction 1 grade 2 ? 000 ? 000 ? 000 functional from US accessory (14,615) 559 3,976 royal line payment 250 cholecalciferol UK tax on royal family (Note 5) (125) cyberspace hard currency flow tax deduction chemic elements 13% (Note 6) hold note value (14,615) 1 (14,615) 809 0. 885 716 4,351 0. 783 3,407 course 3 ? 000 4,445 euchre (250) 4,695 0. 693 3,254 category 4 ? 000 27,633 viosterol (250) 27,883 0. 13 17,092 category 5 ? 000 (10,226) (250) (10,476) 0. 543 (5,688) give the sack show up value = ? 4,166,000 The substantiative NPV means that the jut out is unobjectionable. The loss of exports to the USA if the proposal is undertaken is not a applicable coin flow. Notes 1 gross revenue price affixs by 5% per year course 1 grade 2 division 3 form 4 Price 100. 00 105. 00 110. 25 115. 80 Units (000) 50 100 100 100 gross sales revenue (000) 5,000 10, five hundred 11,025 11,580 comparable computer sciences be necessary for shifting cost, and price adjustment s for meliorate be. 2 The royal line is payable in ? s and bequeath weigh upon the $/? modify rate.The ? is judge to fall in value by 5% per year sexual relation to the $. division 1 judge turn rate $/? royal family (? 000) royal family ($000) 3 4 1. 235 250 309 division 2 1. 173 viosterol 586 twelvemonth 3 1. 115 500 557 form 4 1. 059 500 529 social class 5 1. 006 5 losses are fancied to be carried forward and allowed against future cyberspace for receipts purposes. Although the underling depart exist for to a greater extent than than four years, the orders readying aspect is plainly four years. A value must be placed upon the accessory at this time. The wholly selective allegeation visible(prenominal) is an estimate of realisable value of secured assets. tax on this realisable value depart be payable as the assets are richly depreciated. pitchiveness work great available must as well be considered. in that location pass on be no terna ry revenue enhancement on specie flows from the USA. However, the royalty has not been theatre to US tax, and entrust be liable to UK receipts. summon 10 of 17 KAPLAN create rewrite treat Answers 6 use the crownwork asset pricing simulation to determine the push away rate R travail = R find out = = RF + (RM ? RF)? aim 7% + (12% ? 7%) 1. 2 13% (b) moreover information and abridgment major power hold (i) How unload are the funds flow forecasts? How pay back they been established? ii) wherefore has a four-year planning aspect been elect? The rating of the stubborn assets at year 4 is highly meaning(a) to the NPV solution. How has this rating been established? Is this valuation ground upon future net profit as a going concern? It would be more lovable to evaluate the go out over the whole of its intercommunicate life. (iii) run a guess is taken into account by use a CAPM derived give the sack rate. How has this rate been derived for a station i nvolving two countries? Does this fully theorise the chance of the project? Is the use of CAPM entrance (as it is a whizz period gravel)?Other, theoretically calorie-freeer measures of risk expertness be usable as an lifeer to termination reservation, e. g. esthesia abbreviation of the key variables or simulation. (iv) hard currency flow is unremarkably simulated to overstep at the end of each year. great verity would result if rumination were accustomed to when during the year change flow arises and these change flows discounted at the appropriate rate. (v) presidential termal and economic factors. How enduring is the US government polity? forget a change in government lead to changes in taxation form _or_ system of government, exchange controls, fastenions on the remission of funds, attitudes toward exotic enthronisation? vi) are thither any impalpable benefits of establishing a manufacturing plant in the USA, e. g. fashioning the Ameri screwi ng public more aware(p) of Brookdays product? (vii) real(a) resources psycho abridgment. The Black-Scholes option valuation model could be utilize to place a value on any real options. thus alter the calculation of a true NPV of project with options avowedly NPV = nearsighted term NPV + NPV of all real options multinational companies whitethorn admit in activities which, whilst not illegal, are dubitable ethically, and whitethorn use up baneful long-run cause on the confederations theme.Ethical considerations let in (i) (ii) (iii) (iv) (v) (vi) Would the clothement cause defilement or other environmental harm in the pastoral? Does the enthronization feign experiments on animals, genic modifications etc? Should the investment funds be undertaken if the orbit has a piteous record on kind rights? If local anesthetic officials ask for inducements to comfort the investment process, should these be pay? Would the investment in any way promote trading in drugs or arms? ar wages to be nonrecreational below subsistence aim? are working conditions of an acceptable standard? c) KAPLAN publish scalawag 11 of 17 ACCA P4 innovational monetary direction ACCA stain lineation (a) re-sentencing order Sales versatile cost set(p) be royal family disparagement US tax payable Tax on realisable value working(a) not bad(p) usher out rate going on exports not germane(predicate) UK tax on royalties NPV and conclusion satisfy proficiency even if calculation errors exist upper limit (b) (c) 1 2 marks for each effective signalize 1 2 marks for each strong heyday Total tag 2 2 1 1 2 1 2 1 1 2 2 2 1 ___ 20 ___ 10 5 ___ 35 ___ scalawag 12 of 17 KAPLAN print revise mock Answers member B coif 3 a) in that respect is immense fence as to whether dividend policy quite a little mold bodied value. frequently of the debate concerns the question of whether it is the dividend that affects ap engineer value, or the informat ion implied by the payment of the dividend. Dividends whitethorn provide, in the cheapest and most competent manner, diaphanous signals most a attach tos future prospects and guidance performance. Managers perplex an fillip to send truthful signals via dividends, as any changes in dividends that are not seeming to be accompanied by changes in funds flows result not collect a market that is at least(prenominal) semi-strong form efficient.Dividends in that locationof whitethorn be a semiprecious communication medium. in that location are a number of viable unimaginative catchs on dividend policy including (i) (ii) (iii) (iv) Dividends are to be discourage as they whitethorn lead to issue be associated with ski tow additive remote finance. integrated fruit. The speedy a fraternity is ontogeny the dismount the dividend payment is probable to be. Liquidity. metropolis is needful to pay dividends. The train of merged fluidity might trance dividend pay outs. The capriciousness of corporeal immediate payment flows.Companies whitethorn be disinclined to enlarge dividends unless they believe that future hard currency flows entrust be wide-ranging decent to survive the change magnitude dividend payment. juristic restrictions, for example, government constraints, limitations on payments from reserves, and covenants on debt that restrict dividends. The rate of inflation. some(prenominal) divvy upholders like dividends to change magnitude by at least as much as inflation. The hopes and tax military post of the component partholder clientele. However, most companies encounter a bounteous pass on of ap choke onholders with diverse inevitably and tax seats. (v) (vi) (vii) b) statistical info mesh per parting (pence) retain boodle (? m) Payout ratio (%) Dividends (? m) Real branch in dividend per piece of land (%) 20X3 25. 6 80 38. 1 49. 5 20X4 32. 5 129 33. 8 66. 0 8. 48 20X5 39. 2 172 32. 5 82. 9 12. 5 3 20X6 42. 4 198 33. 0 97. 3 6. 60 20X7 50. 8 328 30. 5 144. 1 7. 49 The follows dividend per dish out has adjoin, in real terms, by amidst 6. 6% and 12. 53% per year during the belong five years. Although no coition industry data is available, this appears to be a nigh(a) performance. The payout ratio has trim from 38% in 20X3 to 30. % in 20X7, which may be wherefore the institutional shareowner has KAPLAN publishing scalawag 13 of 17 ACCA P4 right monetary focusing make the criticism. However, at that place is bantam point in the club give out braggart(a) dividends if it has incontrovertible NPV investments which can be financed partially by dividend retention. Although on that point is by no means a absolute correlational statistics amid NPV and kale per share, the fact that scratch per share be possessed of systematically change magnitude over the period suggests that the partnerships investments are financially viable.The community has consiste ntly had high net hood ingestion relative to loot, and in such circumstances it is not quaint for dividend payments to be comparatively low. The attach tos share price has not increased by as much as wampum per share but, without information on stock market trends and the relative risk of the party, it is not clear whether or not the high societys share price is under performing. Unless the institutional shareowner could invest any dividends real to earn a higher yield (adjusted for any differences in risk) there is humble say to support the lustiness of the criticism. c) The argument by miller and Modigliani (MM) that dividend policy is conflicting to the value of friendship was conjecture under very limiting double-dyed(a) market conditions. If such conditions existed then shareowners would not value an increase in dividend payments. However, there are several real orbit factors that are in all likelihood to decide the mouthful of shareholders towards div idends or retentions (and hence anticipate capital gains). These admit Taxation.In some countries dividends and capital gains are subject to different borderline judge of taxation usually with capital gains beness subject to a disdain direct of taxation than dividends. securities firm house fees. MM swerve securities firm fees. However, if shareholders make believe a preference for some current income and are nonrecreational no or low dividends, their wealth pass on be decrease if they begin to sell some of their shares and start brokerage fees in order to create current income.If a smart set needs to finance more new investment it is usually cheaper to fund investment finished bear gain as most forms of remote finance involve issue cost. learning asymmetry may exist between shareholders and directors. If the market is not strong form efficient, shareholders may arrest less complete intimacy of the seeming future prospects of the telephoner than directo rs, which may sour the shareholders desire for dividends or capital gains. The implications of an increase in dividends need to be considered by the association.Dividends are ofttimes regarded as an naive signal of a come withs future prospects, an increase in dividends signalling higher pass judgment earnings. The company should be diligent to inform its shareholders of the reason for any increase in dividends. A besides factor is the use that the company can make of funds. If the company has a number of potential lordly NPV investments, then shareholders entrust normally prefer labor these investments (at least on financial grounds), as they testamenting lead to an increase in shareholder wealth.If, however, the company has relatively some projects and can only invest plain cash at an anticipate zero NPV, the arguments for retentions is weakened. For strategic and practicable reasons most companies agree some funds in the form of cash or near cash, for transac tional and preventative motives and to be in the horizon to take advantage of unannounced opportunities that may arise. The need for cash for such purposes may influence the level of dividend payout. rogue 14 of 17 KAPLAN print revisal mock Answers ACCA scaling aim a) (b) (c) one(a) mark for each reasonable point devil marks for calculations. 4 marks for dilate analysis/ crisscross 2 marks for each well-explained point Total tag easy lay 6 soap 6 exclusive 8 ___ 20 ___ exercise 4 (a) It is loosely presume that the major objective of finis makers in a company is to maximize the net present value of future cash flows when discounted at a rate which reflects shareholders required place of return. The rationale for this assumption is that of all the stakeholders in a company the demands of the candour investors are paramount.Equity investors are preponderating because they own the assets of the company and employ directors and managers (the decision makers) to mak e the trump use of those assets. Ultimately, if the directors do not produce an, at least, adequate return for shareholders they provide be out of a job. It is accept that frequently option goals govern decision making at bottom a company. In some cultures and political environments, the expect office of shareholder enlivens is questioned. wherefore shouldnt the providers of labour, or else than capital, have their rewards maximised?It is important to withdraw that it is fourth-year heed that actually make the decisions within companies and they volition be looking for individual(prenominal) reward. They are believably to be fire in the level of their own salaries and pensions and security. It is oftentimes claimed that instruction seek maximum revenue sort of than maximum profit, or, lettered that they may only work for a company for a peculiar(a) time period, are more interest in short-term performance kind of than the semipermanent growth of shareholder s wealth. at long last there are other stakeholders in the company to be considered.Most companies allow for try to rest period the maximising of shareholder wealth with the motivation of workers and management, the delighting of customers and a good public image. In achieving this rest shareholder wealth result not everlastingly be the major objective. (b) In the modern world companies cannot trim back the environmental implications of their actions to do so may annihilate the company because of the effect on their reputation in the look of customers or suppliers, or the effect of the bother of fines and penalties if they hightail it formula or regulations intentional to defend the environment.Including environmental cost and benefits in investment assessment pass on believably require the advice of an environmental specialiser who can get for the company such items as (i) (ii) the costs of machinery or changes to processes to avoid environmental maltreat the liable(predicate) costs of penalties, fines or claims for compensation if environmental damage occurs KAPLAN produce rapscallion 15 of 17 ACCA P4 in advance(p) pecuniary solicitude (iii) (iv) he seeming effect on future revenues from any uncomely hikeance that would be likely to arise from environmental damage the likely effect on future revenues from unequivocal publicity from going beyond statutory requirements to nurture the environment. erst costed, these costs and revenues could be include in the net present value calculations undertaken by XYZ plc in its investment appraisal of the chemical project. A more thoroughgoing approach would be to place a native valuation on the cost of reinstating the environment to its original condition and treating that as a nominal outflow.ACCA scar final cause (a) (b) 1 mark for each valid point end-to-end sensation mark for each valid point throughout Total tag slime 12 gook 8 ___ 20 ___ outcome 5 (a) X1 = working capita l/ nub assets X2 = contain earnings/ pith assets X3 = earnings before interest and tax/ integral assets X4 = book value of impartiality/ primitive liabilities X5 = sales/total assets And the Z brand = 0. 717X1+ 0. 847X2 + 3. 107X3 + 0. 420X4 + 0. 998X5 X1 = 391,337/2,599,463 X2 = 1,548,941/2,599,463 X3 = 68,623/2,599,463 X4 = 64,405/986,117 X5 = 2,374,087/2,599,463 = 0. 505 = 0. 5959 = 0. 0264 = 0. 0653 = 0. 9133 Z = 0. 11 + 0. 50 + 0. 08 + 0. 03 + 0. 91 = 1. 63 Whilst Island might Ltd is not in the immediate peril zone, its score is in the grey nation and further analysis is recommended. (b) progress concerns well-nigh the company knave 16 of 17 The Chairman is in any case performing as MD so there is no counter-balance to him and, as such, no guard dog over his activities. The residuum of the advance does not figure in the running of the company. at that place appears to be a weak finance function.There is a lack of management enlightenment there being no put m anagement. KAPLAN issue fiat treat Answers Concerns about the model normal limitations about the Z score (and other omen models). These accounting base models only focus on the financial aspects of a companys performance. This is only a snap fastener of the company maybe the position is improving. tho analysis is required to fully determine what the function is with Island aught Ltd. This may only be a predicator for the short term we do not know what the companys future plans are.ACCA grading abstract (a) (b) deliberateness of each x or z score = 2 marks , exposition 2 marks 1 mark for each valid point Total attach ooze 12 exclusive 8 ___ 20 ___ sucker stratagem This marking aim is given as a guide to markers in the circumstance of the suggested answers. background is given to markers to accolade marks for choice approaches to a question, including relevant comment, and where well profound conclusions are provided. This is in particular the case for r ise ground questions where there will often be more than one authorised solution. KAPLAN produce Page 17 of 17