Finance and Accounting

at Maastricht University

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could you explain to me why it is D here? Thank you in advance!
@JMV Vda you have to add: 367,500 (amortized ABC Co. bonds) + (48,000 + 47,000 + 44,000) (trading securities) + 130,500 (LMN Co. stock) = €637,000
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Actually the correct answer is 150million. You did not include the first year, nor the growth factor over the FCFF in future years. So if I am right it should be: (6/1,07) + ((6 * 1,03) / (0,07-0,03)) = 160 million which is closest to 150
its just simply 6/(0.07-0.03)=150
Why is this correct ? Aren't you supposed to pay interests as well ?
in M&M worl there is no taxe
but interest isn't really a tax per se, or?
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I don't u derstand why because an allowance budget of 11250 should have been created for 2017 based on the sales and this 10600 taken out of the allowance? This answer would directly take the actual warranty for an allowance budget which doesn't make sense to me as you don't know the actual amount when setting up the allowance . or is 'provision' suddenly not meant as allowance anymore while it was for the previous question and is this a direct write-off all of a sudden? ... anyone?
I always get 4.9 but the answer is 4.7 , can someone explain ?
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Hi Martijn, I understand your calculation and the 4.7 makes sense, but when checking the resit comments i found this which makes 4.9 correct... how would you calculate it then?
@succes formula?
could you explain why we have to do 1/3*(125) please. And also for for equity with leverage where the 0 25 and 66 come from. thanks :)
Hey so for the 1st question, I thought since the outcome of the cqsh flow is equally likely tqht you have to take it times 1/3 . And for the second question, I just took the unlevered equity cash flow minus the debt. (ex: 150 - 125 = 25 ) I hope this helped you :)
Where did you read how to do it?
Can anyone provide me the solution of participation resit.
How was the resit for everyone else?
Does anyone know when we get the results from the participation resit?
Any complaints for the resit? ?
Any complaints for the resit? ?
Can someone help?
Discount on Bonds Payable is a contra-account of the Bonds Payable account. When the discount on a bond for a certain period is amortized, the balance of the Discount on Bonds Payable account decreases with the amount of the amortization. When the contra-account decreases and the Bonds Payable account remains the same, the total book value increases.
Could someone explain this one plz? :)
The formula used is (Interest tax shield * borrowing cost * tax on income) / borrowing cost. The only this you need to find is the interest tax shield = amount / (borrowing cost * tax rate) = 1/(0.07*0.35) = 40.8163 Finally, you apply all numbers to the formula = (40.4163 * 0.07* 0.15) / 0.07 = 6.1
where do you find this formula?
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Q49 Can someone explain how to get to the answer?
Would be very grateful if someone could explain this one! and also which chapter/ topic is it?
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oh and chapter 15 i think ?
thankyou very much!
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Q23 Why do you have to discount all 3 years if you just want to know the value in year 0?
Where can you find this formula for financial distress? and why do you have to divide by shares outstanding ?
Shouldn't this be 12/48, since the total value of the shares outstanding after the repurchase isn't 60 million but 48 million?
Basically (26000 - 6000)/ 4? or is it also okay to 0,25 x 26000?
no the course coordinator said in the lecture that it is strictly forbidden
What is strictly forbidden? The first one or the second?
Can someone explain why its B and not D. Shouldnt you have more revenue to tax when the price of your inventory is declining?
Yes you are Right. This is the Explanation why B is correct
How do you get 5400?
I guess 7.5k-2.1k = 5.4 but cannot say why :(
Does anyone know how to find step 6, the value of the Tax Shield. Seems impossible to find..
Could you explain how to get to 6650? I thought we have to use the stated bond rate and not the market rate to multiply the bond carrying amount...
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Q15: Ownership stake = 35/60 = 58,33% (just to make it clear ;) )
Yeah the formula is % Ownership = ( vL - new debt - new equity) / ( vL - new debt)
HELP! What is the difference between Allowance and Uncollectible Allowance and Bad Debt Expense?
The "uncollectibles allowance" and "allowance" are the same: an account on the balance sheet that lists all Accounst Receivable payments that the firm expects not to receive. Once a payment is "written off" meaning the firm is certain it won't be collected, you debit Accounts Receivable and credit the "Bad Debt Expense" account.
Could someone explain this question? Why is it B?
The answer is C
Treasury stock : shares repurchased by the firm, in this case 20,000 x €20 = 200,000. They then re-sell the shares but this time for €27 and thus make a "profit" of €70,000.
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Q11: Value Levered = Value Unlevered (250M) + Value Tax Shield (35M) - Value Distress (Unknown) Since the new value is equal to 10,85 * 25 (= 271,25 M ), we can deduct that the costs of Financial distress are equal to 13,75 271,25 M = 250 M + 35 M - 13,75 M
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Q5: Re=0,1+(0,1-0,06) *(12/48) = 11% So the E is equal to 48 million and not 60 in the formula (E= 60 - 12)
why the balance is not 6000 after the adjusting entry?
the answer is D because the total est. bad debt is 9200. 6000 is only the leftover of what still need to be added onto the account (which already contain 3200) to add up to 9200
Is there a difference between those questions? Because for the 1st question I get C but D is correct and for the second question I get B and that is correct and I did the exact same for both questions. At the beginning of 2017, ABC Company issued 10% bonds with a face value of €6,000,000. These bonds mature in the five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for €5,558,400 to yield 12%. ABC Company uses a calendar-year reporting period. Using the effective-interest method of amortization, which interest expense should be reported for 2017? A)€665,000 B)€688,320 C)€669,018 D)€667,008 A company issues €15,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2017. Interest is paid on June 30 and December 31. The proceeds from the bonds are €14,703,108. Using effective-interest amortization, how much interest expense will be recognized in 2017? A)€1,170,000 B)€1,176,373 C)€585,000 D)€1,176,249
I personally get D for both but I just checked and the second one is indeed B ? This is what I did: 1. (5,558,400 * 0.12) = €667,008 2. (14,703,108 * 0.08) = €1,176,249
I agree, something has to be wrong. They might've canceled​ question 2 in the exam?
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Can someone briefly explain Question 25? Cheers.
I think the best explanation is the formula to calculate the Free Cash Flow to Equity itself: FCFE = FCF - ((1 - Tc) * (Interest payments)) + Net Borrowing You can see that interest payments are multiplied by the tax rate and are thus after-tax. :)
How do you calculate this? Help!
100*0.06 = 6 per year * 3 years = 18 per prefered share + 10k Shares = 180k 120k/20k Shares = 6 per share
* 18 Dollar dividend times 10k prefered Shares
Could someone explain why it isn't A?
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Question 24 is also terribly wrong...
Care to explain how the question is done then?
1st: find unlevered cost of capital= (0,5x0,09)+(0,5x0,05)=7% 2nd:unlevered value: FCF/re-g= 6m/(7%-3%)=150m
Why is it C?
That’s the formula of accrued revenue. A revenue that has been earned but not yet collected. Therefore you need AR in debit and credit on revenue
Good luck guys ?
Michigan Bank lends Canton Furniture Company $100,000 on December 1. Canton Furniture Company signs a $100,000, 8%, 4-month note. The entry made by Canton Furniture Company on December 31 to record the accrued interest on the note would be: A) a debit to interest expense and a credit to interest payable of $2,000. B) a debit to interest payable and a credit to interest expense of $2,000. C) a debit to interest expense and a credit to cash of $2,000. D) a debit to interest payable and a credit to cash of $2,000. The answer is A, can someone explain it?
Shouldn't that be increases? Otherwise it would be the exact same statement as in the answer
Again sloppy
This should be 1/0.35/0.07... the current calculation should be equal to 0.0392
Can someone explain me those 2 please :)
I'm not sure about my answer: 50) Warranty is a liability, so it's normal balance is on a the credit side. Here in 2016 we start with normal balance of 2100, so credit 2100. Our expected warranty expense for this year is 7500. (250000*0,03=7500) As we want to know how much we really spent during the year: 7500-2100=5400
Can someone explain the calculations please ??
Double Declining method: 2/useful life 2/4=0.5 32000*0,5^3=4000 to the power of three as there are three years to discount to but as 4000 is smaller than the book value of 6000 Book Value - depreciation amount 6000-4000=2000
Could someone explain this?
92000*0.03=2760 36000*0,05=1800 23000*0,08=1840 14000*0,2=2800 =9200 9200-3200=6000
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Q56: Why is this a debit and not a credit?
I'm not sure, but maybe because a Premium is a credit balance and to lower a credit balance you have to debit it
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where can one find the formula for question 24?
Ch18 under APV method
How do you solve this one? Answer is A
Is this related to the pyramid showing how inventory costs/COGS decrease and increase when prices increase/decrease? Answer is D
Not really related. Just have to know to the concept. FIFO uses the earliest price for COGS,so LIFO uses recent costs for COGS. FIFO uses the latest cost for ending inventory (left over after cogs)
does someone know why it is A here?
Allowance from year 1 to year 2 increased by 10k -> 16k-10k=6k
Hey guys, this one is answer D, no idea how to do??? Thankssssss