- (Topic 1)
A company is considering investing £1 million for a new machine. The new machine is expected to generate £450,000 incremental before-tax operating cash inflows and £100.000 in additional depreciation expense for each of the next ten years. The company uses the same depreciation assumptions tor book and tax purposes. If the company's income tax rate is 30%, what is the change in the yearly after-tax cash flow from operations if the company invests in the new machine?

Correct Answer:D

CORRECT TEXT - (Topic 2)
Explain me concept of relevant cost in the season-making process and discuss whatever the €200, 000 course development coil is relevant to OLi's price decisions in future years
Essay
Online Learning Inc. lOLI) is a privately-held company based in the IUC that specializes in providing online courses in English as a Second Language (ESL). OLI is trying to set up a new sales office in a foreign country. It needs a business license to operate in that country. The license normally lakes six months to obtain. An official of that country said that he could expedite the process for a fee of €300.
OLI estimates the new sales office can bring €300,000 incremental profit annually OLI has just launched a new online 40-houi course to help adult ESL learners master basic business English. The price of the new course is €500 per student, the variable cost is
€300 per student, and the total fixed cost of the new course is €300.000 per year OLI spent
€200.000 to develop the new course before launching it. There are many online course providers in the marketplace, and each has its own feature However, OLI's highly qualified staff and good reputation have enabled it to charge a premium price compared to its major competitors. Recent market research indicates that if OLI raises the price of its new business English course by 10V the student enrollment would decrease by 5V A regional airlines company in Asia has approached OLI and offered to enroll 1.000 of its employees in the new course if OLI would agree to a special price of €350 per employee If OLI accepts this offer, an additional €10,000 onetime cost would be required to temporally expand its capacity to accommodate the new students.
Solution:
Relevant com is cost which is incurred in future and incremental because of the division and in terms of cash other costs are considered to be relevant while making a decision. The development cost is a past cost incurred before mating the decision and hence irrelevant.

Does this meet the goal?

Correct Answer:A

CORRECT TEXT - (Topic 2)
Identify and describe two defenses Blue Moon could use if it does not wish to be acquired by Guda.
Essay
Food Depot Ltd, (FDL) is a privately-held company that provides catering services to airlines and operates several restaurant chains including fast food, casual dining, and fine dining restaurants, FDL has been profitable in recent years and has a very strong cash position. FDL's newest division. Food_TO-Go is an online meal ordering and delivery platform acquired by FDL two year ago.
In 20X7, sales for the entire company were $1 billion, with 50% of the business coming from the Airline Catering division. FDL is the country ??s leading airline catering services provider and control 60% of the market share. However, the outlook of the airline catering industry is gloomy. The compound annual growth rate of the industry for the past five years was only 0.5% as airline networks have increasingly dropped catering on short domestic flights.
The Food-To-division only contribution 5% of FDL??s total sales in 20X7 and is far behind in competing for marketing for market share of the online meal ordering and delivery industry, it is estimated that Food-To-Go??s sales were only 20% of the industry leader??s sales. However, the outlook for the online meal ordering and delivery services industry is bright. The compound annual growth rate of the industry since it started three years ago was 50%. It is estimated the rapid growth of the industry will continue in the foreseeable future.
Susan Willey, the head of Food-To-Go, does not agree that the Airline Catering division is the best-performing division in the company. Wiley argues that ber division bad the highest ROI in 20X7, and it deserves more capital finding. FDL??s requested rate of return is 12%. The selected financial data for the Airline Catering division and Food-To-Go division in 20X7 are as follow (in $ millions)

Solution:
They can simply revalue their assets and hence ask for a higher price for their company or they are structure their financing structure by either issuing debts or reducing me equity by paying a special one off dividend.

Does this meet the goal?

Correct Answer:A

CORRECT TEXT - (Topic 2)
Explain why facilitating payments can create possible ethical and legal issues tor a company
Essay
Online Learning Inc. lOLI) is a privately-held company based in the IUC that specializes in providing online courses in English as a Second Language (ESL). OLI is trying to set up a new sales office in a foreign country. It needs a business license to operate in that country. The license normally lakes six months to obtain. An official of that country said that he could expedite the process for a fee of €300.
OLI estimates the new sales office can bring €300,000 incremental profit annually OLI has just launched a new online 40-houi course to help adult ESL learners master basic
business English. The price of the new course is €500 per student, the variable cost is
€300 per student, and the total fixed cost of the new course is €300.000 per year OLI spent
€200.000 to develop the new course before launching it. There are many online course providers in the marketplace, and each has its own feature However, OLI's highly qualified staff and good reputation have enabled it to charge a premium price compared to its major competitors. Recent market research indicates that if OLI raises the price of its new business English course by 10V the student enrollment would decrease by 5V A regional airlines company in Asia has approached OLI and offered to enroll 1.000 of its employees
in the new course if OLI would agree to a special price of €350 per employee If OLI accepts this offer, an additional €10,000 onetime cost would be required to temporally expand its capacity to accommodate the new students.
Solution:
it can create ethical and legal issues as in some countries it might be considered as a would and would be illegal and secondly in gives undue favour to the company as compared to the company who has actually waited for 6 months to get the license.

Does this meet the goal?

Correct Answer:A

- (Topic 1)
A management accountant overheard the company's procurement manager discussing a kickback payment for one of the company s recent projects. The procurement manager promised to pay a share to the other person II the arrangement was kept confidential According to the IMA Statement of Ethical Professional Practice which one of the following is the most appropriate action for the management accountant to take?

Correct Answer:B

- (Topic 1)
Which one of the following statements best describes an offering after an initial public offering where a benchmark stock price will already exist?

Correct Answer:B