Compuvac Company Has Just Completed Its First Pass Forecast Using

question 8

Multiple Choice

Compuvac Company has just completed its first pass forecast using the projected statement of financial position method.The firm has determined that it needs R4 million in new debt which can be sold at par with a 10% annual coupon.Additionally, the firm will sell 500,000 shares of new ordinary equity at R18.10 per share.Next year's expected dividend is R0.48 per share.The firm expects that taxes will be R160,000 less under the second pass than they were under the first pass based on a 40% tax rate.Given this information, what is the incremental change in AFN for Compuvac going from the first pass to the second pass?

• A) R240,000
• B) R0
• C) R480,000
• D) R160,000
• E) R640,000

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Definitions:

Maturity Date

The date on which a financial obligation must be repaid in full.

Promissory Note

A financial document in which one party promises to pay another party a definite sum of money at a future date or on demand.

Interest Due

The amount of interest payment that is owed but not yet paid by a borrower to a lender at a given point in time.

Intermediate Calculations

Calculations performed between the initial and final stages of a financial or statistical analysis to derive a specific outcome or insight.