Company W produces mobile phone components and has recently tendered for a substantial contract. The results of the tendering process will not become available until three months from now. If the company is successful it will require 2,000 units of a commodity which is currently traded in an open commodity market for $740 per unit. However, there has been speculation that this commodity could increase substantially in price over the next three months and so the company is considering purchasing the commodity now and storing it for three months.The funds to buy the commodity would be borrowed at an annual interest rate of 7% and the storage cost of the product would be $5.40 per unit per month. The storage costs would be paid at the end of the three month storage period.Which of the following represents the gain or loss (to the nearest thousand dollars) that will accrue to Company W assuming that the price of the commodity rises to $800 in three months' time?
A project has been evaluated on the basis that it will cost $14 million and will have a net present value of $2.3 million.The project has commenced and $3 millionof the initial $14 million has been invested. A problem has been discovered that will cost an additional $2.5 million to rectify. The $2.5 million will be payable immediately.What is theNPV of continuing with this project?
VBN's home currency is the V$. On 1 January, VBN must make a payment of C$2 million on 31 March of that same year.On 1 January the spot exchange rate was V$1 = C$0.4.On 1 January VBN paid $180,000 for a call option to buy C$2 million for V$5.5 million on 31 March. VBN's cost of borrowing was 8% per year.On 31 March the spot rate was V$1 = C$0.45.What was the total cost, including the cost of the option, of settling the payable?
GUJ A small but rapidly expanding company has recently opened several branches in locations far away from the Head Office. All of the branches are relatively small with no one branch accounting for more than 5% of turnover. Management has decided that the company is not yet large enough to install an Internal Audit function but is, nonetheless, concerned about maintaining adequate control and monitoring at the branches whilst allowing Branch Managers the opportunity to react to local circumstances as appropriate.Which of the following measures would assist Head Office management in maintaining appropriate monitoring and control at the branches?
You have been assigned the role of lead internal auditor. Your task is to carryout the annual assessment of the production line maintenance department.When planning for this audit, which of the following must be completed?