Beruflich Dokumente
Kultur Dokumente
Suggested Answers
Certificate in Accounting and Finance Spring 2016
Page 1 of 9
Cost and Management Accounting
Suggested Answers
Certificate in Accounting and Finance Spring 2016
W-3: Purchases
Raw material consumed P&L 36.30
Opening raw material inventory (3030360) (2.50)
Closing raw material inventory (36.330360) 3.03
36.83
(b) In the context of the given example the terms are briefly explained as under:
(i) Strike price
The investor has a right to buy 500 shares for Rs. 20,000 i.e. at Rs. 40 per share.
Therefore, Rs. 40 is the strike price.
Page 2 of 9
Cost and Management Accounting
Suggested Answers
Certificate in Accounting and Finance Spring 2016
Page 3 of 9
Cost and Management Accounting
Suggested Answers
Certificate in Accounting and Finance Spring 2016
Page 4 of 9
Cost and Management Accounting
Suggested Answers
Certificate in Accounting and Finance Spring 2016
Conclusion: As internal rate of return (IRR) is higher than the company's cost of capital, it is
advisable to acquire the plant on lease.
Page 5 of 9
Cost and Management Accounting
Suggested Answers
Certificate in Accounting and Finance Spring 2016
Page 6 of 9
Cost and Management Accounting
Suggested Answers
Certificate in Accounting and Finance Spring 2016
Page 7 of 9
Cost and Management Accounting
Suggested Answers
Certificate in Accounting and Finance Spring 2016
Page 8 of 9
Cost and Management Accounting
Suggested Answers
Certificate in Accounting and Finance Spring 2016
(THE END)
Page 9 of 9