Incident Command System Essay Example

QUESTION 1-1

Company investing ventures-It is a positive indication for investor that the firm is actively investing their firms and when the ventures on which their firm were invested in become stable their shares will grow tremendously and also increase in dividends due to increase in returns because of its operation extension.

No dilution of ownership- The investors are always confident on their ownership level since the firm doesn’t need to sell shares to other new investors but use the profit which was to be paid to shareholders as dividends thus avoiding dilution of ownership.

Prevailing tax rate- the investors can agree not to be paid dividends so as to avoid high prevailing tax rate in the market and they can be paid after the tax rate has gone down or when the amount is economical to be paid to shareholders after tax.

Compounding policy in some firms also encourage investors to invest in firms which don’t pay dividends since the amount is compounded therefore, one will earn from dividend growth and also the compounded dividend.

The growth of the share can also induce the investors to decide not to take dividends but use them for acquisition of more shares through process like right-issue this will increase shareholder wealth in future.

The overall management of the shareholder funds- when the invested money is properly utilized and the whole process is transparent with availability of the supporting documents makes the investor to have confidence in the company and this makes them to be reluctant in taking their profits as dividends but agree to invest back to the business. But for a mismanaged organisation investors will withdraw their dividends and may end up selling their shares too.

Market trends- for example Google, Due to the increase in global use of internet e.g e-commerce shows a positive trend of increase in returns in future and also growth of their shares at an increasing rate. Thus making it worth for an investor to invest his/her funds in such organisation irrespective of not being paid dividends.

QUESTION 1-2

ACCOUNTANT

FINANCE OFFICER

CORE ACTIVITIES.

  1. Recording of day to day transaction in the organisation.

  2. Ascertaining that the transaction is entered correctly according to international accounting regulation.

  3. Making sure the international standards of accounting are maintained.

  4. They reconcile books of account at the end of the financial period and deliver them to directors who then sing and submit to auditors for audit.

  1. They are involved in analysis of viability of the firm projects.

  2. Advice and forecast on the risks that might be faced by the firm in future.

  3. They are involved in budget making and formulations of controls to such budgets.

  4. They manage funds in the organisation.

  5. They are involved in resource allocation.

DIFFERENCES

  1. It is involved in recording preparation of the data so they primary source of accounting information.

  2. They report on the present and historical transaction deals relating to the firm.

  3. They don’t have need to look on other issues not relating to transaction entry.

  1. They provide information on the current position of the firm.

  1. It uses the already recorded data for analysis of the financial issues of the firm (secondary sources).

  2. They report using historical, present and estimated future transaction deals relating to the firm i.e. budgets preparation.

  3. They look on broader aspects affecting the firm in achieving their objectives e.g. inflation, demography and government interventions.

  4. They provide information on the future position of the firm through budgeting and also analysis of future investing plans of the firm

QUESTION 2-1

Gross profit margin=Finance and investment×100%

Therefore: Gross profit=Finance and investment 1

Finance and investment 2= $186 million.

Taxable income

$(million)

$(million)

Gross profit

LESS: deductibles.

Interest on borrowing.

Depreciation

Taxable income

Amount taxed Tax Remainder

1st 18,200

2nd 37,000-18,200=18,800

150,000,000-18,200=149,981800

3rd 80,000-37,000=43,000

149,981800-18,800=149,963,000

4th 180,000-80,000=100,000

149,963,000-43,000=149,920,000

5th149,820,000

149,920,000-100,000=149,820,000

  1. Therefore tax liability =$54,547+ ($149,820,00×0.45)

=$67,473,547

Notes: operating expenses are disallowed because they are directly related to the product hence it was included calculation of COGS.

  1. Full franked dividends distributed = dividends profit paid out of profit- corporate tax.

= ($150,000,000-$67,473,547) =82,526,453 ×0.7

=$57,768,517.1

  1. Dividend amputated credit = 82,526,453-57,768,517.1

= $24,757,935.9

QUESTION 2-2

TAXABLE INCOME. ($) ($)

Less: COGS

Finance and investment 3

(450,000)

Gross profit

Less: deductibles

Interest

(20,000)

Depreciation

(30,000)

(50,000)

Add: unfranked dividend

ABC capital gain.

Net taxable income

  1. Tax liability= 54,547+(257,118-18,200-18,800-43,000-100,000)0.45

=$89,250.1

  1. Marginal tax rate =Finance and investment 4

=Finance and investment 5

  1. Average tax rate =Finance and investment 6

=Finance and investment 7

QUESTION 3-1

Pv- Present value.

Fv — Future value.

K -Interest rate.

N- No of compounding or years.

  1. FV=PV(1+K)n

=500(1.05)15

=$1,039.46

  1. PV=FV(1+K)-n

n=52×10=520

k=0.056/52=0.0010769

Therefore: PV=35,000(1.0010769)-520

=$19,998.34.

  1. PV=FV(1+K)-n

n= x × 12=12x

k=6.6/12 =0.55

Therefore: 10,000=14,600(1.0055)-12x

log (Finance and investment 8)=-12x log 1.0055

-0.16435=-0.02858x

x=Finance and investment 9

=5.7 years

  1. FV=PV(1+K) n

24,644=5,000 (1+r) 52/2×10

Finance and investment 10=1+r

1.00615-1=r

Therefore: interest rate =0.615 × 26= 15.99% pa.

QUESTION 3-2

  1. PV=AFinance and investment 11

=500
Finance and investment 12

=$3,860.87

  1. PV=AFinance and investment 13

r = 10/2 = 5%

n=2×5 =10

=100
Finance and investment 14

=$772.17

  1. PV=AFinance and investment 15

r = 14/12 = 1.167%

n=7×12 =84

=35
Finance and investment 16

=$1,867.44

  1. PV=AFinance and investment 17

r = 10.4/52 = 0.2%

n=52×5 =260

=250
Finance and investment 18

=$50,646.33.5

  1. Effective interest rate=(1+i/n)n-1

  1. EAR=(1+0.5/10)10-1

  1. EAR=(1+0.1/10)10-1

  1. EAR=(1+0.14/84)84-1

  1. EAR=(1+0.104/260)260-1

It is noted that EAR is slightly higher than the normal rate.

QUESTION 3-3

  1. PV=FV(1+K)-n

PV=1,000,000(1.0466)-25

=$320,244.54

  1. Finance and investment 19

0 year 25 years

Present value $320,244.54 Lamp sum future value $ 1,000,000

  1. PV=FV(1+r)-n

PV=1,000,000(1+0.1/52)-25×52

=$82,282.30

  1. FV=AFinance and investment 20

1,000,000 =300
Finance and investment 21

log (1000,000×0.1/52÷300)=log(1.00192352X) — log 1

log 6.41 +log1= 52xlog1.001923

x=0.8068 ÷0.0434

=18.59 years

  1. PV=FV(1+r)-n

r=10+3.3(inflation)=13.3%

PV =1,000,000(1+0.133/52)-25×52

=$36,125.54

  1. PV=AFinance and investment 22

36,125.54=AFinance and investment 23

A=36,125.54÷376.85

=$95.86 Per week

QUESTION 4-1

  1. i=R+r+Rr

Where i is nominal interest rate.

R is real interest rate.

r is inflation rate.

0.095=R + 0.0275 +0.0275R

R=Finance and investment 24

  1. risk premium =real interest rate – risk free rate.

Risk premium=6.57- 1.75

  1. Real interest rate= risk free rate + risk premium.

Real interest rate =1.75+10.17

i=R+r+Rr

i=11.92+1.75+11.92×1.75

Nominal interest rate=34.53%

Question 4-2

  1. Negative correlation is a good portfolio because the two investments move in opposite direction. When saferinvest profit reduces the outthere profits will be increasing and vise versa. This shield the investor when one investment make loss because it will be compensated by the other investment.

  2. Investment weigh of: Saferinvest=25,000/50,000

outthere=25,000/50,000

  1. Expected overall return

(0.5×0.08)+ (0.5×0.15)=0.115 x100%

  1. Expected deviation

(0.5×0.12)+ (0.5×0.18) =0.15×100%

  1. Deciding on the most favorable proportion. return (0.6×0.08)+ (0.4×0.15)=0.108

Deviation(0.6×0.12)+ (0.4×0.18) =0.144

Return (0.4×0.08) + (0.6×0.15)=0.122

Deviation(0.4×0.12) + (0.6×0.18) =0.156

When, Saferinvest =60% and outthere 40% Return change is 0.1155-0.108=0.0075

Deviation change=0.15-0.144=0.006

It is not advisable to increase investment of saferinvest because deviation is less than change in return.

Saferinvest =40% and outer 60% Return change is 0.1155-0.122=0.0065

Deviation change=0.15-0.156=-0.006

Therefore she should invest 60% on Outthere Company and 40% on saferinvest because return is at the highest point and deviation is at the lowest point.