It is going to be report format Essay Example | Topics and Well Written Essays - 2500 words

It is going to be report format - Essay Example In Joe’s case, a partnership relationship usually existed between him and his sister: they used to buy tickets together and discuss the possibility of using their shares of the ticket. According to Beyer G.W. and Petrini J. â€Å"If a taxpayer purchased a lottery ticket with the intent and understanding that the proceeds would be shared with others, the courts have treated the proceeds of the ticket as income to all the recipients rather than as income to just the purchaser.†1 However, on that particular week, Joe’s stepsister did not contribute to the purchase of the ticket and the partnership relationship between the two of them stopped at that moment. It is possible to talk about an intention of sharing the profit in the past weeks, when Joe’s stepsister contributed to the lottery ticket’s purchase, which explains Joe’s intention to share the prize. Joe was the only person who bought the ticket and it is clear that under these circumstance s the intention of sharing the possible profit did not exist. ... on that particular week, Joe was the only buyer of the lottery ticket 3. the fact that his stepsister did not contribute to the purchase of the winning lottery ticket may serve as proof in Joe’s favour to show that on that week he did not buy the ticket with the intention of sharing the prize with his stepsister I would advise Joe not to worry about having to share the prize with his stepsister. Word count: 481 words b) I believe that Lawrence & Co can be held liable for inducing Joe to conclude the contract by creating a false representation on the capacity of the premises. According to Richards P. (217) â€Å"A misrepresentation may be defined†¦ as a false statement of fact that induces another to enter into a contract.†2 It is obvious that Lawrence & Co has made a false statement regarding its premises in order to induce Joe to enter into a contract with it. Even though at the beginning of the negotiations Tim actually believed that the premises were big enough to fit 25 of Joe’s courier vans, the fact that the premises were actually smaller than believed was discovered by Tim during the negotiation process. The disclosure of this discovery at that moment would have stopped the negotiation process and lead to a lost deal for Tim’s business. Therefore, Tim voluntarily hid the discovered fact, believing that there will be no legal consequences against him. Moreover, the belief that all 25 courier vans will fit into the premises was practically the reason that convinced Joe to sign the contract. In the case of Derry v Peek3 the House of Lords concluded that â€Å"Fraud is established where it is proved that a false statement is made: (a)

Business and Financial Environment 2 Essay Example | Topics and Well Written Essays - 2000 words

Business and Financial Environment 2 - Essay Example (Moles and Terry, 1997). A firm faces finances risk if there is a high probability that it might be unable to meet its fixed financial obligations or prior chares such as interest, principal repayments, lease payments, or preferred stock dividends. Financial risk is therefore risk arising from the use of debt finance, which requires periodic payments of interest and principal and may not be covered by the firm's operating cash flows. (Moles and Terry, 1997). The capital structure of a firm is made up of both debt and equity components. Although the use of debt in financing part of the firm's operations is advantageous to the firm, these advantages tend to disappear when too much debt is used. In effect when debt is used above the optimum level, the result is financial distress. (Ross et al, 1999). Ross et al (1999) asserts that debt puts pressure on the firm, since interest and principal repayments as well as short-term payables are financial obligations. In the event where these obligations are not met, the firm may risk some sort of financial distress. (Ross et al, 1999). Debt obligations are fundamentally different from stock obligations in that bondholders are legally entitled to interest and principal repayments more than stockholders are legally entitled to dividends. (Ross et al, 1999). ... (Ross et al, 1999). Although debt carries a tax advantage, the costs of financial distress tend to offset this advantage when debt is used above the optimal level. (Ross et al, 1999). The optimal level of debt can be referred to as the debt level that provides the maximum firm value. the value of the firm begins to disappear once this debt level is exceeded. (Ross et al, 1999). The firm should therefore adopt a debt-to-equity ratio that maximizes the value of the firm. (Ross et al, 1999). Question (ii) WCOA Ltd Ordinary Shareholders' Required Rate of Return. Under this section, the required rate of return is calculated under the assumption that the risk class of the new investment remains the same as the risk of the original investment. This calculation is done before and after the issue of the new debentures. Having said this we now calculate the required rate of return before the issue of the new debentures and we later calculate the return after the issue of the new debentures. a) Required Rate of Return for WCOA Ordinary Shareholders Before the issue of the New Debentures.1 Earnings from original investments 64.000 Earnings from new investment 8.000 Total Earnings before interest 72.000 Interest (8% of 320,000) 25.600 Earnings after interest 46.400 Number of shares outstanding 130.000 Earnings per share (EPS) 0,3569 Book Value 260.000 Book Value per share 2 Expected Return on ordinary equity shares (ROE) 17,85% b) Required Rate of Return for WCOA Ordinary Shareholders after the issue of the New Debentures.2 Earnings from original investments 64.000 Earnings from new investment 8.000 Total Earnings before interest 72.000 Interest (8% of 400,000)