With the overdraft method, interest is charged only on the daily ___.A.credit balanceB.

A.fee

B.account

C.merger

D.overdraft

A.agreed

B.bargained

C.discussed

D.decided

nt account.()

A.draw

B.overdraw

C.withdraw

D.withdrawal

Interest on a bank overdraft will be charged to a firm's ______.

A．balance sheet

B．profit and loss account

C．current account

D．deposit account

s and an overdraft is not allowed.

A．Right

B．Wrong

C．Doesn't say

If the statement of financial position shows a bank overdraft of ￡34,000, then the bank T account will have a credit balance of ￡34,000 on that date.（)

此题为判断题(对，错)。

The statement of financial position of BKB Co provides the following information:

BKB Co has an equity beta of 1·2 and the ex-dividend market value of the company’s equity is $125 million. The ex-interest market value of the convertible bonds is $21 million and the ex-dividend market value of the preference shares is $6·25 million.

The convertible bonds of BKB Co have a conversion ratio of 19 ordinary shares per bond. The conversion date and redemption date are both on the same date in five years’ time. The current ordinary share price of BKB Co is expected to increase by 4% per year for the foreseeable future.

The overdraft has a variable interest rate which is currently 6% per year and BKB Co expects this to increase in the near future. The overdraft has not changed in size over the last financial year, although one year ago the overdraft interest rate was 4% per year. The company’s bank will not allow the overdraft to increase from its current level.

The equity risk premium is 5% per year and the risk-free rate of return is 4% per year. BKB Co pays profit tax at an annual rate of 30% per year.

Required:

(a) Calculate the market value after-tax weighted average cost of capital of BKB Co, explaining clearly any assumptions you make. (12 marks)

(b) Discuss why market value weighted average cost of capital is preferred to book value weighted average cost of capital when making investment decisions. (4 marks)

(c) Comment on the interest rate risk faced by BKB Co and discuss briefly how this risk can be managed. (5 marks)

(d) Discuss the attractions to a company of convertible debt compared to a bank loan of a similar maturity as a source of finance. (4 marks)

A.a properly payable check issued by the drawer is presented for payment, but the drawer's account does not have sufficient funds in it

B.the drawer issues a stop-payment order for a check, but the bank still goes ahead and pays the holder of the check

C.the bank pays the holder of a check in which the amount payable is altered to indicate a higher amount than was originally intended

D.the payee presents the check after six months from the date of the check and the bank still pays the holder

entory days vary throughout the year within the following range:

All purchases and sales are made on a cash basis and no inventory of raw materials or work in progress is carried. Crag Co intends to finance permanent current assets with equity and fluctuating current assets with its overdraft.

In relation to finished goods inventory and assuming a 360-day year, how much finance will be needed from the overdraft？

A.$10m

B.$17m

C.$30m

D.$40m