MNO'S ROCE was 15%. If company gearing was 20%, and net assets were £150,000,calculate shareholder funds.A) 105,000120,000125,000135,000PQR's plant, costing £80,000, was damaged in its 6th year of business use. Plant life is 10years. Engineers reckon residual plant life to be 3 years with value-in-use of £30,000. Theplant could be scrapped now for £10,000. Calculate the asset impairment.A) 25,000B)ABGD20,000C) 15,00010,000STU acquired 40% of VWX for £250,000. The latter's profits in the year after the takeoverwere £60,000. Calculate the investment in VWX to be disclosed in STU's group accounts.A) 250,000ABODB) 274,000C) 280,000D) 310,000YZA's quick asset ratio is half the current ratio. Current assets excluding inventory were£60,000. Calculate the inventory amount in current assets.A) 25,000ABODB)C)30,00045,00060,000HIJ acquired all shares and half of the loan stock in KLM whose net assets were revaluedby £120,000 from £340,000 at the time. Goodwill arising was £24,000, and leverage inKLM was 25%. Calculate the investment in KLM in HIJ's books.A)B)ABCD298,000316,000392,000436,000

Question 1:Step 1:Return on Capital Employed (ROCE): ROCE is calculated as the ratio of operating…

Answered: MNO'S ROCE was 15%. If company gearing…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 2P

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Question

MNO'S ROCE was 15%. If company gearing was 20%, and net assets were £150,000,
calculate shareholder funds.
A) 105,000
120,000
125,000
135,000
PQR's plant, costing £80,000, was damaged in its 6th year of business use. Plant life is 10
years. Engineers reckon residual plant life to be 3 years with value-in-use of £30,000. The
plant could be scrapped now for £10,000. Calculate the asset impairment.
A) 25,000
B)
ABGD
20,000
C) 15,000
10,000
STU acquired 40% of VWX for £250,000. The latter's profits in the year after the takeover
were £60,000. Calculate the investment in VWX to be disclosed in STU's group accounts.
A) 250,000
ABOD
B) 274,000
C) 280,000
D) 310,000
YZA's quick asset ratio is half the current ratio. Current assets excluding inventory were
£60,000. Calculate the inventory amount in current assets.
A) 25,000
ABOD
B)
C)
30,000
45,000
60,000
HIJ acquired all shares and half of the loan stock in KLM whose net assets were revalued
by £120,000 from £340,000 at the time. Goodwill arising was £24,000, and leverage in
KLM was 25%. Calculate the investment in KLM in HIJ's books.
A)
B)
ABCD
298,000
316,000
392,000
436,000

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