ACCA考试《高级财务管理》真题及标准答案Word格式文档下载.docx

ACCA考试《高级财务管理》真题及标准答案Word格式文档下载.docx

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SectionA–ThisONEquestioniscompulsoryandMUSTbeattempted

LirioCoisanengineeringcompanywhichisinvolvedinprojectsaroundtheworld.Ithasbeengrowingsteadilyforseveralyearsandhasmaintainedastabledividendgrowthpolicyforanumberofyearsnow.Theboardofdirectors（BoD）isconsideringbiddingforalargeprojectwhichrequiresasubstantialinvestmentof$40million.Itcanbeassumedthatthedatetodayis1March2016.

TheBoDisproposingthatLirioCoshouldnotraisethefinancefortheprojectthroughadditionaldebtorequity.Instead,itproposesthattherequiredfinanceisobtainedfromacombinationoffundsreceivedfromthesaleofitsequityinvestmentinaEuropeancompanyandfromcashflowsgeneratedfromitsnormalbusinessactivityinthecomingtwoyears.Asaresult,LirioCo’scurrentcapitalstructureof80million$1equitysharesand$70million5%bondsisnotexpectedtochangeintheforeseeablefuture.

TheBoDhasaskedthecompany’streasurydepartmenttoprepareadiscussionpaperontheimplicationsofthisproposal.ThefollowinginformationonLirioCohasbeenprovidedtoassistinthepreparationofthediscussionpaper.

ExpectedincomeandcashflowcommitmentspriortoundertakingthelargeprojectfortheyeartotheendofFebruary2017

LirioCo’ssalesrevenueisforecasttogrowby8%nextyearfromitscurrentlevelof$300million,andtheoperatingprofitmarginonthisisexpectedtobe15%.ItisexpectedthatLirioCowillhavethefollowingcapitalinvestmentrequirementsforthecomingyear,beforetheimpactofthelargeprojectisconsidered:

1.A$0·

10investmentinworkingcapitalforevery$1increaseinsalesrevenue;

2.Aninvestmentequivalenttotheamountofdepreciationtokeepitsnon-currentassetbaseatthepresentproductivecapacity.Thecurrentdepreciationchargealreadyincludedintheoperatingprofitmarginis25%ofthenon-currentassetsof$50million;

3.A$0·

20investmentinadditionalnon-currentassetsforevery$1increaseinsalesrevenue;

4.$8millionadditionalinvestmentinothersmallprojects.

Inadditiontotheabovesalesrevenueandprofits,LirioCohasoneoverseassubsidiary–PontacCo,fromwhichitreceivesdividendsof80%onprofits.PontacCoproducesaspecialisttoolwhichitsellslocallyfor$60each.Itisexpectedthatitwillproduceandsell400,000unitsofthisspecialisttoolnextyear.Eachtoolwillincurvariablecostsof$36perunitandtotalannualfixedcostsof$4milliontoproduceandsell.

LirioCopayscorporationtaxat25%andPontacCopayscorporationtaxat20%.Inadditiontothis,awithholdingtaxof8%isdeductedfromanydividendsremittedfromPontacCo.Abi-lateraltaxtreatyexistsbetweenthecountrieswhereLirioCoisbasedandwherePontacCoisbased.Thereforecorporationtaxispayableonprofitsmadebysubsidiarycompanies,butfullcreditisgivenforcorporationtaxalreadypaid.

ItcanbeassumedthatreceiptsfromPontacCoarein$equivalentamountsandexchangeratefluctuationsonthesecanbeignored.

SaleofequityinvestmentintheEuropeancountry

ItisexpectedthatLirioCowillreceiveEuro（€）20millioninthreemonths’timefromthesaleofitsinvestment.The€hascontinuedtoremainweak,whilethe$hascontinuedtoremainstrongthrough2015andthestartof2016.Thefinancialpresshasalsoreportedthattheremaybeapermanentshiftinthe€/$exchangerate,withfirmsfacingeconomicexposure.LirioCohasdecidedtohedgethe€receiptusingoneofcurrencyforwardcontracts,currencyfuturescontractsorcurrencyoptionscontracts.

ThefollowingexchangecontractsandratesareavailabletoLirioCo.

Required:

（分数：

50）

（1）.Withreferencetopurchasingpowerparity,explainhowexchangeratefluctuationsmayleadtoeconomicexposure.（分数：

6）

__________________________________________________________________________________________

正确答案：

（

Purchasingpowerparity（PPP）predictsthattheexchangeratesbetweentwocurrenciesdependontherelativedifferencesintheratesofinflationineachcountry.Therefore,ifonecountryhasahigherrateofinflationcomparedtoanother,thenitscurrencyisexpectedtodepreciateovertime.However,accordingtoPPPthe‘lawofoneprice’holdsbecauseanyweaknessinonecurrencywillbecompensatedbytherateofinflationinthecurrency’scountry（orgroupofcountriesinthecaseoftheeuro）.

Economicexposurereferstothedegreebywhichacompany’scashflowsareaffectedbyfluctuationsinexchangerates.Itmayalsoaffectcompanieswhicharenotexposedtoforeignexchangetransactions,duetoactionsbyinternationalcompetitors.

IfPPPholds,thencompaniesmaynotbeaffectedbyexchangeratefluctuations,aslowercurrencyvaluecanbecompensatedbytheabilitytoraisepricesduetohigherinflationlevels.Thisdependsonmarketsbeingefficient.

However,apermanentshiftinexchangeratesmayoccur,notbecauseofrelativeinflationratedifferentials,butbecauseacountry（orgroupofcountries）losetheircompetitivepositions.Inthiscasethe‘lawofoneprice’willnothold,andpricesreadjusttoanewandlong-termorevenpermanentrate.Forexample,theUK£

toUSA$ratedeclinedinthe20thcentury,astheUSAgrewstrongereconomicallyandtheUKgrewweaker.Theratealmostreachedparityin1985beforerecovering.Sincethefinancialcrisisin2009,ithasfluctuatedbetweenroughly$1·

5to£

1and$1·

7to£

1.

Insuchcases,whereacompanyreceivessubstantialamountsofrevenuefromcompaniesbasedincountrieswithrelativelyweakeconomies,itmayfindthatitisfacingeconomicexposureanditscashflowsdeclineoveralongperiodoftime.

）

（2）.Prepareadiscussionpaper,includingallrelevantcalculations,fortheboardofdirectors（BoD）ofLirioCowhich:

（i）EstimatesLirioCo’sdividendcapacityasat28February2017,priortoinvestinginthelargeproject;

（9marks）

（ii）AdvisesLirioCoon,andrecommends,anappropriatehedgingstrategyfortheEuro（€）receiptitisduetoreceiveinthreemonths’timefromthesaleoftheequityinvestment;

（14marks）

（iii）Usingtheinformationondividendsprovidedinthequestion,andfrom（b）（i）and（b）（ii）above,assesseswhetherornottheprojectwouldaddvaluetoLirioCo;

（8marks）

（iv）Discussestheissuesofproposedmethodsoffinancingtheprojectwhichneedtobeconsideredfurther.（9marks）

Professionalmarkswillbeawardedinpart（b）fortheformat,structureandpresentationofthediscussionpaper.（4marks）（分数：

44）

Discussionpapertotheboardofdirectors（BoD）,LirioCo

Discussionpapercompiledby

Date

Purposeofthediscussionpaper

Thepurposeofthisdiscussionpaperis:

（i）ToconsidertheimplicationsoftheBoD’sproposaltousefundsfromthesaleofitsequityinvestmentintheEuropeancompanyandfromitscashflowsgeneratedfromnormalbusinessactivityoverthenexttwoyearstofinancealargeproject,insteadofraisingfundsthroughequityand/ordebt;

（ii）ToassesswhetherornottheprojectaddsvalueforLirioCoornot.

Backgroundinformation

Thefundsneededfortheprojectareestimatedat$40,000,000atthestartoftheproject.$23,118,000ofthisamountisestimatedtobereceivedfromthesaleoftheequityinvestment（appendices2and3）.Thisleavesabalanceof$16,882,000（appendix3）,whichwillbeobtainedfromthefreecashflowstoequity（thedividendcapacity）of$21,642,000（appendix1）expectedtobegeneratedinthefirstyear.However,thiswouldleaveonly$4,760,000availablefordividendpaymentsinthefirstyear,meaningacutinexpecteddividendsfrom$0·

27/shareto$0·

0595/share（appendix3）.Thesamelevelofdividendswillbepaidinthesecondyearaswell.

Projectassessment

Basedonthedividendvaluationmodel,LirioCo’smarketcapitalisation,andthereforeitsvalue,isexpectedtoincreasefromapproximately$360milliontoapproximately$403million,orbyjustunder12%（appendix3）.Thiswouldsuggestthatitwouldbebeneficialfortheprojecttobeundertaken.

Possibleissues

1.Thedividendvaluationmodelisbasedonanumberoffactorssuchas:

anaccurateestimationofthedividendgrowthrate,anon-changingcostofequityandapredictablefuturedividendstreamgrowinginperpetuity.Inadditiontothis,itisexpectedthatthesaleoftheinvestmentwillyield€20,000,000butthisamountcouldincreaseorreduceinthenextthreemonths.Thedividendvaluationmodelassumesthatdividendsandtheirgrowthratearethesoledriversofcorporatevalue,whichisprobablynotaccurate.

2.AlthoughthedividendirrelevancytheoryproposedbyModiglianiandMillersuggeststhatcorporatevalueshouldnotbeaffectedbyacorporation’sdividendpolicy,inpracticechangesindividendsdomatterfortwomainreasons.First,dividendsareusedasasignallingdevicetothemarketsandunexpectedchangesindividendspaidand/ordividendgrowthratesarenotgenerallyviewedpositivelybythem.Changesindividendsmaysignalthatthecompanyisnotdoingwellandthismayaffectthesharepricenegatively.

3.Second,corporatedividendpolicyattractscertaingroupsofshareholdersorclientele.Inthemainthisisduetopersonaltaxreasons.Forexample,higherratetaxpayersmaypreferlowdividendpayoutsandlowerratetaxpayersmaypreferhigherdividendpayouts.Achangeindividendsmayresultintheclientelechangingandthischangeovermayresultinexcessiveandpossiblynegativesharepricevolatility.

4.Itisnotclearwhyth