REVISION PART SOURCES OF FUNDS FOR ORGANISATIONS REV QUESTION 1 December 2008. a) The following information was extracted from the accounting records of Karibu Lid. As at 3 QUI Sh. "(0("" a ) Total assets 2,400,060 Accounts payable 750,000 Sales revenue (year ended 31 December 2008) 5,000,000 Ordinary share capital 850,090 Retained earnings 50,000 Sales revenue for the year ending 31 December 2009 is expected to increase by 25%. Total assets and accounts payable are proportional to sales and that relationship will be maintained in future. The company raised sh. 150 million by floating new ordinary shares on I January 2009. The company's profit margin on sales is 6 percent. 60 per cent of the earnings attributable to ordinary shareholders will be paid out as dividends. Required: i ) Total debt for Karibu Lid. as at 31 December 2008. ii) The new long term - debt financing that ill be needed in the year 2009. AUGUST 2009 PILOT PAPER QUESTION TWO.A QUESTION 2 a) "Explain four reasons that may drive a company to raise equity finance rather than debt finance. DECEMBER 2007 QUESTION TWOA QUESTION 3 Bidii Ltd expects a return on investment (ROI) of 24 % on proposed investment projects whose total cost is 5,000,090. In order to finance these investment projects the company is considering two options. Option one Issue 500,000 ordinary shares at a par value of sh. 10 each. Option two Issue 250,000 ordinary shares at a par value of sh. 10 each and obtain the balance through a bank loan at all interest rate of 15% per annum. The rate of corporation tax is 30% Required: Determine the effect of the two financing options on the earnings available to shareholders and hence advise the company on the best financing option. JUNE 2007 UESTION FOUR C QUESTION 4 b) Explain the factors that influence the type of finance sought by a manufacturing company section 3 F.MTopic 6 The following is an accounts receivable aging schedule for Caulfield Lid on 30 June 2019. Customer Total Number of days past due 1-30 31-60 61-90 Over 90 Bela 18,000 11,000 7,000 Tom 22,000 22,000 Jason 35,000 15,000 12,000 8,000 Lee 41,000 41,000 Estimated percentage uncollectable 5% 10% 25% 50% At 30 June 2019, the unadjusted balance in allowance for doubtful debts is a credit of $8,000. At 31 March 2020, a debtor named Alan declared bankrupt and unable to pay $500 owing to Caulfield Lid. At 15 May 2020, a cheque for $500 is received from Alan whose account was written-off as uncollectable on 31 March. At 30 June 2020, the unadjusted balance in allowance for doubtful debts is a debit of $500 and the ageing schedule indicates that total estimated bad debts will be $25,000. Required: a) Show the general journal entry to record the adjusting entry at balance day 30 June 2019. b) Show the general journal entry record the events and transactions related to Alan in 2020. c) Show the general journal entry to record the adjusting entry at balance day 30 June 2020.(12 points} Consider the payoff matrix below. The players make their choices simultaneously and without communication between them. The game will be played only once. Each player is aware of the whole payoff matrix. B Firm B A Raise P Hold P Cut P Raise P 20 30 40 Firm A 2D SCI 20 Hold P 4E! 30 5E] 3D 40 40 Cut P '10 2E! 30 2D SCI 10 a. If Firm A decides to raise its price and Firm B decides to cut its price, what is Firm B's payoff? b. Does Firm A have a dominant strategy? If so, what is it? c. Does Firm B have a dominant strategy? If so, what is it? d. Which option raise, hold, cut should Firm A choose? e. Which option should firm B choose? f. Is there a Nash equilibrium in this game? If so, which outcome is it? (Describe the outcome by giving A's option and B's option.) (4 points} How many Nash equilibria could there be, at most, in a game with a 3 x 5 payoff matrix? (El points} Consider the payoff matrix below. Two firms are thinking about offering a new model of their product. There is not enough demand for both firms to have good sales if they both offer the new model. a. What is a value of X that will make this game a prisoner's dilemma prob em? b. As a prisoner's dilemma problem, which outcome is the dominant strategy equilibrium? c. As a prisoner's dilemma problem, which outcome would the firms choose if they could collude? (Assume that the two firms can talk to each other, but they cannot exchange funds for each other's cooperation.)