Solutions by peter obrien for chapter 7 making

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Unformatted text preview: y Peter O’Brien for Chapter 7: Making Securities Transactions, Financial Planning in Australia, 3rd ed, by Taylor, Juchau & Houterman Problem 16 (a) $7,000 (b) $3,000 (c) $12,000 (d) $2,360 (e) 34% (b) NIL (c) $12,000 (d) $2,600 (e) 26% (b) $18,200 (c) $58,800 (d) $14,280 (e) 52% (b) $27,300 (c) $58,800 (d) $13,370 (e) 73% Problem 17 (a) $10,000 Problem 18 (a) $27,300 Problem 19 (a) $18,200 Solution to Case Study 7.1 (a) $60,000 (b) 70 ∗100% ≈ 37.23% 188 (c) 94 ∗100% = 50% 188 (d) Maximum loan ratio of 50% applies to the whole portfolio of shares not just this purchase. As we saw in part (c), the ratio for the whole portfolio is 50%. (e) 928% for this transaction. (f) 100% for this transaction. 5 © 2009 Reed International Books Australia Pty Limited trading as LexisNexis: Solutions by Peter O’Brien for Chapter 7: Making Securities Transactions, Financial Planning in Australia, 3rd ed, by Taylor, Juchau & Houterman Solution to Case Study 7.2 (a) $166,000 (b) 113 ∗100% ≈ 32.29% 350 (c) 175 ∗100% = 50% 350 (d) Equity in Investment $21,000 Total Purchase Price 10,000 ∗ $4.30 + 15,000 ∗ $8.20 = $166,000 Interest Paid Dividends Received Total Sale Price Total Profit Return on Invested Capital 0.08 ∗ $145,000 = $11,600 15,000 ∗ $0.40 = $6,000 10,000 ∗ $8.60 + 15,000 ∗ $16.40 = $332,000 $332,000 + $6,000 − $11,600 − $166,000 = $160, 400 160, 400 ∗ 100% ≈ 764% 21,000 (e) Equity in Investment $166,000 Total Purchase Price 10,000 ∗ $4.30 + 15,000 ∗ $8.20 = $166,000 Interest Paid Dividends Received Total Sale Price Total Profit Return on Invested Capital NIL 15,000 ∗ $0.40 = $6,000 10,000 ∗ $8.60 + 15,000 ∗ $16.40 = $332,000 $332,000 + $6,000 − $166,000 = $172,000 172,000 ∗ 100% ≈ 104% 166,000 6...
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This note was uploaded on 08/21/2012 for the course FINS 2624 taught by Professor Hneryyip during the Three '10 term at University of New South Wales.

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