ACTY 6291 Investments Semester 2 2015 Question 6: Performance Measurements 20 Ma
ID: 2578309 • Letter: A
Question
ACTY 6291 Investments Semester 2 2015 Question 6: Performance Measurements 20 Mark:s a) Share prices and dividends for Minions Limited over the last four years are presented below End of Year Annual dividend per share received before the end of the year $0.52 $0.45 $0.41 $0.38 Closing share price at the end of the year 2011 2012 2013 2014 $4.79 $5.92 $6.87 $5.78 Suppose an individual investor made the following transactions in Minions Limited shares: 1. Bought 30,000 shares at the end of 2011 2. Sold 17,000 shares of the existing shares and simultaneously bought 6,000 additional shares at the end of 2012 3. Sold 5,500 shares at the end of 2013 4. Sold the remaining shares at the end of 2014 i) Determine the relevantcash outflows andcashinflows of the above trans actions. Show your calculations. [5 marks] li) Based on your findings in Part i), calculate the average dollar-weighted rate of return (DWR) for those transactions [2 marks]Explanation / Answer
1. Calculation of Cash Inflows and outflows.
Particulars
Shares Number
Amount per share
Total Amount of Cash Flow
Cash Outflows:
Purchase of shares at end of 2011
30,000
4.79
43,700
Purchase of shares at end of 2012
6,000
5.92
35,520
Total Cash Outflows
79,220
Cash Inflows:
Receipt of Dividend on 30,000 before end of 2012
30,000
0.45
13,500
Sale of shares at end of 2012
17,000
5.92
100,640
Receipt of dividend on remaining 19,000 shares (30,000 -17,000 +6,000)
19,000
0.41
7,790
Shares sold at end of 2013
5,500
6.87
37,785
Receipt of dividend on remaining 13,500 shares (30,000 -17,000 +6,000 – 5,500)
13,500
0.38
5,130
Shares sold at end of 2014
13,500
5.78
78,030
Total Cash Inflows
242,875
Particulars
Shares Number
Amount per share
Total Amount of Cash Flow
Cash Outflows:
Purchase of shares at end of 2011
30,000
4.79
43,700
Purchase of shares at end of 2012
6,000
5.92
35,520
Total Cash Outflows
79,220
Cash Inflows:
Receipt of Dividend on 30,000 before end of 2012
30,000
0.45
13,500
Sale of shares at end of 2012
17,000
5.92
100,640
Receipt of dividend on remaining 19,000 shares (30,000 -17,000 +6,000)
19,000
0.41
7,790
Shares sold at end of 2013
5,500
6.87
37,785
Receipt of dividend on remaining 13,500 shares (30,000 -17,000 +6,000 – 5,500)
13,500
0.38
5,130
Shares sold at end of 2014
13,500
5.78
78,030
Total Cash Inflows
242,875
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