Lopster Ltd is considering investment in a three year project which would provide after tax cash flow of Year 1: $35,000, Year 2: $40,000 and Year 3: $50,000. The project would require an initial investment of $ 90,000. The project will be funded through 50% equity the cost of which is 14%. The remaining would be funded through issue of three year $100 face value bond at a price $102. The bonds would pay an annual coupon at the rate of 10%. If the marginal tax rate for the project is 30% then based on Net Present Value (NPV) criteria Lopster should
Glasphemy Ltd is expected to report an Earnings Per Share (EPS) and Dividend Per Share (DPS) of $25 and $ 10 respectively last year. The company's Book Value Per Share (BVPS) is $180. The company's shares are trading a Price to Book Ratio (P/B) of 1.30. The Cost of Equity (ke) estimated for Glasphemy using Dividend Discount model would be closest to
Babu and Salman are discussing about cost of equity and made the following statements.
Babu: For estimating cost of equity during the issue of equity the floatation cost should be deducted from the issue price of the share. Alternatively the cost can be deducted from the cashflows in the subsequent years on a prorata basis (of usage of capital)
Salman: For a given company cost of equity would be always higher than cost of debt. While raising additional capital the point at which the marginal cost of capital changes is called 'Break Point'.
a) Babu is only partially correct and Salman is completely correct
b) Both Babu and Salman are completely correct
c) Babu is completely correct and Salman is only partially correct
Samtro Ltd sells specialized bearings which is their sole product. Fixed cost for Samtro is $800,000 and the manager mentioned that they have to sell 20,000 units to make profit of $100,000 provided that their variable cost if $35/unit then the sale price per unit of Specialized bearings is closest to
Hi nckm, Schweser notes are enough to pass the exam, But you just don want to pass u want to have a in depth knowledge of subject, so its better to refer CFA curriculum also
Paul and Collin are discussing about dividends and made the following statements
Paul: Company's pay dividend in form of both cash and non-cash. A stock repurchase is an example of non-cash dividend.
Collin: A dividend payout ratio is defined as the percentage of share's face value that will be declared as dividend. After a 1:2 stock split if the dividend payout ratio is held constant the dividend yield will nearly double.
a) Both are partially correct
b) Paul is partially correct but Collin is completely incorrect
I have done my B.com from Mumbai University with the worst grade possible.Right now I am working for Infosys BPO pune. But still I want to go for CFA. Please advise should I go for it, what are the pros and cons.
also i have original curriculum books(very good condition) of cfa level 1 2013. if anyone interested to buy it for 2000/- ( including courier) do drop a mail with your number
Kajal and Deepika were discussing about measurement of portfolio returns and made the following statements
Kajal: The Time weighted return is equivalent to geometric mean of holding period returns. The money weighted return is equivalent to Internal Rate of Return.
Deepika: The Money weighted return is more accurate way to measure a fund manager's performance. For a given portfolio with positive return the Effective Yield would increase as the compounding frequency increase.
a) Kajal is completely incorrect , Deepika is completely incorrect
b) Kajal is Partially correct , Deepika is completely incorrect
c) Kajal is completely incorrect , Deepika is Partially correct
Given the current inflationary situation the analyst team of Bull Investments Ltd feels that the chances of interest rates going up over next two quarters are high. So they conducted a survey amongst the top analyst and declared that there is 40% chance that interest rate will go up in next quarter (Q1) and 20% chance for it to come down in Q1. The rates may also be held stable which is the only other possibility. If rates are increased in Q1 then in Q2 the chances of Rates going up, remaining stable and going down are 30%, 50% and 20% respectively. If rates are reduced in Q1 then in Q2 the chances of Rates going up, remaining stable and going down are 60%, 30% and 10% respectively. If rates are held constant in Q1 then in Q2 the chances of Rates going up, remaining stable and going down are 40%, 35% and 25% respectively. Later in the year an analyst observed that the rates were held stable in Q2. Given this information what is the chance of rates NOT having decreased in Q1.
