Drive Bot Ltd own significant intangible assets and the directors want to calculate the CIV (Calculated...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Drive Bot Ltd own significant intangible assets and the directors want to calculate the CIV (Calculated Intangible Value) of the company. Tangible assets are worth R50 million. Drive Bot Ltd's latest accounting period profit after interest but before tax was reported as R16 million. Its debt finance comprises a long-term bond with a coupon rate of 8% and a nominal value of R20 million. The company has a WACC of 10%. The industry average pre-tax return on assets for the industry is 12%. The corporate tax rate is 27%. What is the CIV of Drive Bot Ltd (to the nearest R0.1 million)? (3) What is the current share price? Wheel Co is based in country W (functional currency W$). Wheel Co's suppliers are based in the UK, and they invoice Wheel Co in British Pounds (GBP). The current spot exchange rate is W$/GBP 7.50 (that is W$ 1 = GBP 7.50). The expected interest rates in country W and the UK are 2% and 8% per annum respectively over the next year. What is the expected spot exchange rate in six-months' time, using the interest rate parity theory and assuming that the current forward rate is the best forecast of the future spot rate? (3) Drive Bot Ltd own significant intangible assets and the directors want to calculate the CIV (Calculated Intangible Value) of the company. Tangible assets are worth R50 million. Drive Bot Ltd's latest accounting period profit after interest but before tax was reported as R16 million. Its debt finance comprises a long-term bond with a coupon rate of 8% and a nominal value of R20 million. The company has a WACC of 10%. The industry average pre-tax return on assets for the industry is 12%. The corporate tax rate is 27%. What is the CIV of Drive Bot Ltd (to the nearest R0.1 million)? (3) What is the current share price? Wheel Co is based in country W (functional currency W$). Wheel Co's suppliers are based in the UK, and they invoice Wheel Co in British Pounds (GBP). The current spot exchange rate is W$/GBP 7.50 (that is W$ 1 = GBP 7.50). The expected interest rates in country W and the UK are 2% and 8% per annum respectively over the next year. What is the expected spot exchange rate in six-months' time, using the interest rate parity theory and assuming that the current forward rate is the best forecast of the future spot rate? (3)
Expert Answer:
Answer rating: 100% (QA)
To calculate the Calculated Intangible Value CIV of Drive Bot Ltd we need to determine the value of its intangible assets Given that the tangible asse... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0470161012
9th Canadian Edition, Volume 2
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield.
Posted Date:
Students also viewed these finance questions
-
Assume that self-esteem measurements are not affected by an interaction between subject self-esteem and target self-esteem. Is there sufficient evidence to support the claim that the category of the...
-
To test whether students in a higher grade level would be less disruptive in class, a school psychologist recorded the number of documented interruptions during one day of classes from nine local...
-
You wish to test if two population means are equal to each other, against an alternative that they are different. You may assume equal variances. You have two samples n1-12 and n2-12. What is the...
-
What characteristics are required in a safety PLC?
-
Tru Developers, Inc. sells plots of land for industrial development. Tru recognizes income for financial reporting purposes in the year it sells the plots. For some of the plots sold this year, Tru...
-
used soon at Insmqclavab inemagenam o dosque osmolya smenil vd ebay abrismeb ener ter ne 2.1 Human Resource (HR) Managers or Training & Development Specialists need to confirm that the content of the...
-
A home network is shown in the following figure and its configurations are shown in the table below. rest of Internet E Router interface D E home network WAN side IP address 130.155.169.8 IP address...
-
Create monthly budget as an esthetician that includes expenses, broken down as specifically as you can, and income. Then for each expense, estimate its percentage out of your total expenses, totaling...
-
Convert the following binary numbers to their decimal equivalent: A. 00101111 B. 01010010 C. 01110110 D. 00111001
-
Converrt the following expressions using DeMorgan's rules: A. z ~x~Y; B. z = ~ (xy);
-
Indicate whether the following statements are syntactically correct or incorrect. If incorrect, indicate what is wrong with the statement: A. Scanner inputFile=new Scanner (new file (Sample.dat));...
-
Write a recursive method to reverse a given string. The method accepts a string as a parameter and returns the reverse of the string. For example, if the argument is Java, then the method returns...
-
Given the following variables, give the result of each of the following operations (show all 8 bits): int num1 = 0b00110101, num2 = 0b11001010, ans; *A. B. *C. D. ans = num1 & num2; ans = num1 |...
-
Bethany Link delivers parts for several local auto parts stores. She charges clients $2.60 per mile driven. She has determined that if she drives 2,500 miles in a month, her average operating cost is...
-
Continuation of Exercise 4-83. (a) What is the probability that the first major crack occurs between 12 and 15 miles of the start of inspection? (b) What is the probability that there are no major...
-
Assume the same data as in P2013 and that Provincial Airlines Corp. has an incremental borrowing rate of 8%. Instructions Answer the following questions, rounding all numbers to the nearest dollar....
-
Refer to the data and other information provided in E202. In E On September 1, 2011, Wong Corporation, which uses private enterprise GAAP, signed a five-year, non-cancellable lease for a machine. The...
-
On January 1, 2011, Ryan Animation Ltd., which uses IFRS, sold a truck to Letourneau Finance Corp. for $65,000 and immediately leased it back. The truck was carried on Ryan Animations books at...
-
What is the payback period for the project described in Problem 4.21 if the maintenance increases by $\$ 500 /$ year (after the first year)? Data from in problem 4.21 What is the payback period for...
-
What is the payback period for the project described below? Machine investment $24,999 MARR 18% Annual benefit $5,000 Annual maintenance Life Salvage value $2,500 7 years $1,000
-
Describe the relationship between dynamic modeling, behavioral modeling, and structural modeling.
Study smarter with the SolutionInn App