Grand Goals Bhd., is in the business of manufacturing steel utensils: Financial Management, Case Study, UTM, Malaysia

University Universiti Teknologi Malaysia (UTM)
Subject Financial Management

Question 1   

Grand Goals Bhd., is in the business of manufacturing steel utensils. The firm is planning to diversify and add a new product line. The company requires machinery and can either purchase or get it on lease basis .

The machine can be purchased for $15,000,000. It is expected to have a useful life of 5 years with salvage value of $1,000,000 after 5 years. The purchase can be financed by a 20 percent loan repayable in 5 equal annual instalments (inclusive of interest) becoming due at the end of each year. Alternatively, the machine can be taken on year-end lease rentals of $4,500,000 for 5 years. You may assume the following:

(a)  The company follows a written down value method of depreciation, the rate of depreciation being 25 percent.

(b)  Tax rate is at 24 % and cost of capital is 18 percent

(c)  Lease rents are to be paid at the end of the year.

(d)  Maintenance expenses is estimated at $ 300,000 per year to be borne by the lessee.


Advice the company on which option it should choose.

Get Solution of this Assessment. Hire Experts to solve this assignment for you Before Deadline.

Question 2  

Zaman Silam Bhd have 500 employees with an average salary of $3,000 per month. Their average age are 30. The company is planning to start an Endowment scheme as the company pension scheme for all the company’s employees. The period of investment is expected to be for 30 years before the first batch of employees will go for retirement.

The company is going to set aside a salary deduction system to deduct 50% of the required installment for the endowment scheme. The installment payment will be invested in the endowment scheme with a target to achieve a capital endowment sufficient to generate income to take care of the pension payment at 50% of the last drawn salaries expected to average at RM10,000 in 40 years time. A fund management with a good reputation had assured that the endowment fund will generate an average return at 6% per annum.

  1. Estimate the monthly installment required by the company to the endowment fund.
  2. How much will each employee will have to contribute monthly to the pension fund.
  3. If each employee has an option to join the fund or to create their own investment fund, what would be your choice and why?

Question 3

Fast Mawar Bhd is a company that manufactures box mowers. It had net income of $ 15 million on revenues of $ 50 million last year, after depreciation charges of $ 10 million. Capital expenditures last year amounted to $ 16 million and total non-cash working capital was $ 10 million. The firm had a cash balance of $ 15 million and paid 50% of its earnings as dividends last year. There is no debt outstanding.

  1. Assuming that revenues, capital expenditures and depreciation grow 10% a year and that net income grows 12% a year for the next four years, and that the non-cash working capital as a percent of revenues does not change over this period, estimate the cash balance at the end of year 4, if the company maintains its current payout ratio and borrows no money.
  2. What proportion of earnings will Fast Mawar have to be pay out as dividends if the firm wants to to preserve its existing cash balance of $ 15 million at the end of 4 years?
  3. Assuming that Fast Mawar does not want to issue new shares and wants to maintain its existing payout ratio of 50% what debt ratio will the firm have to utilize over the next four years, to have a cash balance of $ 30 million at the end of the fourth year.

Question 4     

Zanzibar Bhd  has the following capital structure.

Source of Financing                After-Tax Cost     Cost of fund

                                                     RM’000                  RM ‘000

Bond                          8%          40,000

Term loan                     9%          20,000

Overdraft                     13%.           4,000

Preferred Stock           10%          10,000

Common Equity          14%         50,000

      Accounts payable                       15,000

Required :

What will be the costs of fund of the company ?

Are You Searching Answer of this Question? Request Malaysian Writers to Write a plagiarism Free Copy for You.

Question 5

The       following  are       financial  summary   of        Gemar  Bhd.                                   

RM’000    2019       2020      2021       2022      2023    Average                                                                              

Profits   After      Tax       (NCF)      RM’000    2,500.00  2,760.00  2,635.00  2,900.00  3,100.00           

Retained  Profit     (NCF.K)   RM’000     1,550.00  1,775.00  1,600.00  1,800.00  1,900.00                                                                                          

Dividend  (NCF(1-K)) RM’000    950.00     985.00    1,035.00  1,100.00  1,200.00                                                                                                                                

Share     Capital    +         retentions                                                                      

B/F       30,000.00  31,550.00 33,325.00  34,925.00 36,725.00                                                  

C/F       (=         BF        +          Retained  Profit)   31,550.00 33,325.00 34,925.00 36,725.00 38,625.00                                                                                    

Retention Rate       K         0.62       0.64      0.61      0.62      0.61      0.62                         

r         on         opening   capital    0.083     0.087     0.079     0.083     0.084     0.083                                                                                                                   

g         =          Kr        =          0.05.                                                                

Required  :                                                                                                    

Using     the        Gordon    Growth     model,    calculate the       value     of        the       company.

Financial Management

Question 6

The following are the summary of financial for Daya Subur Bhd.

  2019 2020 2021 2022 2023
Net Income RM‘000 $1,857 $2,136 $2,456 $2,825 $3,248
– (Cap Ex – Depreciation) (1 – DR) $1,484 $1,632 $1,795 $1,975 $2,172
–  Change in Working Capital (1 – DR) $193 $213 $234 $257 $283
Free Cash Flow after expenditures $180 $291 $427 $592 $793
Expected Dividends $193 $222 $256 $294 $338
Cash available for stock buybacks ($13) $69 $171 $299 $455

The following are the summary of financial for Daya Subur Bhd.

Required :

  1. Compare the company’s dividend with the FCFE at the last 5 years of information.
  2. Would you choose to pay more cash dividend to the shareholders ?
  3. What form should the dividend take ( cash dividend or share buyback ?

Stuck in Completing this Assignment and feeling stressed ? Take our Private Writing Services.

Get Help By Expert

Hello Malaysian Students! Are you feeling overwhelmed by your Financial Management case study? Don't stress! Our assignment helper Malaysia service is here to help you. You can complete your assignment by hiring our experts. Our Malaysian experts have 10 years of experience and can provide you top-notch support. We provide you with 100% plagiarism-free work, which is completed on time and gives you excellent grades.


Recent Solved Questions

Online Exam & Assignment Writing Services

70841+ Orders Delivered

5 Star Rating

Confidential & Secure Assignment Help For

Group Assignment Help

Online Exam -Test & Quiz

Cheapest Price Quote

Diploma & Certificate Levels

Semester & FYP Papers

Summative & Individual

GBA & Reflective

Last Minute Assistance

Sample Assignment Download

BMS424 Microbial Molecular Genetics UITM Assignment Answer Malaysia
BMS424 Microbial Molecular Genetics is a course offered at UITM Malaysia that provides students with an introduction to the fundamental molecular aspects of prokaryotic systems. The course delves into the…
BDY413 Bioinformatics UITM Assignment Answer In Malaysia
BDY413 Bioinformatics is an introductory course in Malaysia that focuses on the application of mathematical and computational methods to analyze biological data. It utilizes computer tools for biological research, aiming…


Instant Paper Writing Services by Native Malaysia Writers

Plagiarism Free Solutions
100% Original Work
24*7 Online Assistance
Native PhD Experts
Hire a Writer Now