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:

Isopropanol

Also known as isopropyl alcohol, a colorless, flammable chemical compound with a strong odor, used as a solvent and disinfectant.

Moles

In chemistry, a unit that measures the amount of substance, defined as containing exactly 6.02214076 × 10^23 particles, such as atoms, molecules, ions, or electrons.

Sodium Chloride

Common table salt, an ionic compound made of sodium and chloride ions, used in food and as a deicing agent.

Sodium

A soft, silvery-white, highly reactive metal that is found in many salts, essential for nerve and muscle function in the human body.