Against Evaluating proposed expansion plans (the fourth example), there should be a tick under Financial
management.
Chapter 5 Page 91
Error:
$4m
80% 365 = 61 days
$30m
Correction:
$4m
365 = 61 days
$30m 80%
Chapter 6 Page 123
Error: Expandable text step 2
No. of re-orders pa 3,1062
Correction: Expandable text step 2
No. of re-orders pa 3,162
Chapter 7 Page 149
Error:
Saving is 63 days (dropping from 73 days to 10) and there are 365 3 = 5.794 periods in a year
Correction:
Saving is 63 days (dropping from 73 days to 10) and there are 365 63 = 5.794 periods in a year
Chapter 9 Page 253
Error:
a. ROCE=
b. ROCE=
$150,000
Average annual profit
100 =
100 = 18.75%
$450,000
Average investment
Correction:
a. ROCE=
b. ROCE=
13%
13%
11%
8%
Time
T0
T1
T2
Timing of tax
relief
(6,500)
19,500
1,950
T2
(4,875)
14,625
1,463
T3
$
26,000
Initial
investment
WDA @ 25%
Written down
value
WDA @ 25%
Written down
value
Sales proceeds
Time
Tax saving
@30%
$
(12,500)
T0
$
T1
$
16,000
T2
$
16,000
(4,800)
T3
$
16,000
(4,800)
T4
$
(4,800)
(26,000)
12,500
1,950
1,463
(26,000)
16,000
13,150
25,163
1.000
0.926
0.857
0.794
(26,000)
14,816
11,270
19,979
638
4,162
0.735
$16,268
Correction:
Time
T0
T2
T3
Time
(26,000)
1.000
(26,000)
100 = 6/6%
33
500
100 = 6.6%
Page 366
Error: (TYU answer 1)
(b) (v)
33
91
100 = 3.6%
100 = 36%
1,950
T2
(4,875)
14,625
1,463
T3
638
T4
T1
$
16,000
T2
$
16,000
(4,800)
T3
$
16,000
(4,800)
1,950
13,150
0.857
11,270
12,500
1,463
25,163
0.794
19,979
T4
$
(4,800)
(26,000)
(6,500)
19,500
(12,500)
2,125
T0
$
Timing of tax
relief
$
26,000
Initial
investment
WDA @ 25%
Written down
value
WDA @ 25%
Written down
value
Sales proceeds
Balancing
allowance
T1
Tax saving
@30%
$
16,000
0.926
14,816
638
(4,162)
0.735
(3,059)
$17,006
20 + + 7.5
= 17.92%
Correction:
7.5
20
Error:
7,500,000
8,300,000
20%
17.92%
800,000
8,300,000
7.5% 18.79
Correction:
7,500,000
800,000
20% +
7.5% =18.79%
8,300,000
8,300,000
Page 587
Error:
NPV=
150,000
= (431,624)
0.1404 1,150,000
Correction:
150,000
NPV=
1,500,000 = (431,624)
0.1404
Page 589
Error:
WACC =
7
21.6
8.71% +
14.6
21.6
= 11.29%
Correction:
WACC =
7
21.6
8.71%
14.6
21.6
0.7
0.7 + 0.03 (1 0.30)
Correction: (TYU 2)
= 1.6
0.7
0.7 + 0.3 (1 0.3)
Page 622
Error: (TYU 2)
= Rf (1 t)
= 10% (1 0.30) = 7%
Correction: (TYU 2)
Kd
= Rf (1 t)
= 10% (1 0.3) = 7%
12.53% = 11.29%
Page 623
Error: (TYU 2 Step 2)
1.23
1.23
0.6818
= e
1.23
e =
0.6
= e
1.80
2.67
1.02
2.49
1
2.05
0.78
1.85
0.74