Problem Solving

Attach a photo or a scanned copy of your handwritten solutions to the following requirements.
Write your name on the upper left hand corner of each page of paper that you will use.
Round off your final answers to the second decimal place.
On this form, remove peso sign, percentage sign and comma.

The historical cost and the carrying value of Blue Corporation’s building is P5,500,000 and
P3,500,000 respectively. It is 40% depreciated. If the replacement cost per square foot is
P4,000 and the building is 1,500 square feet, what is the sound value of the building?  *
1 point

3,600,000
Your answer

Purple Candy Co. makes handmade candies using an old-fashioned heavy-duty press that has
a useful life of 50 years. It is currently on its 35th year. If its current reproduction cost is
P100,000, what is its sound value? *
1 point

30,000
Your answer

Black and White Corp.’s balance sheet shows total assets of P3,000,000 and total liabilities of
P1,350,000. It has 50,000 ordinary shares issued, of which 5,000 are treasury shares. Upon
checking the market, assets can be sold at 85% of book value today but an additional
P300,000 will be incurred to cover liquidation expenses. How much is the liquidation value
per share of Black and White Corp.? *
1 point

20
Your answer
How much is the value of synergy based on the information gathered? *
1 point

4,411,764.71
Your answer

How much should Mr. Brown receive from Mr. Blue upon the former leaving the business?  *
1 point
 1,334,000
Your answer

You acquired a piece of land that has a total purchase price of P200,000. You plan to hold the
land for five years then sell it. Upon selling it, you expect to receive P300,000 as selling price
and to incur total cost to dispose at P10,000. How much would your required return on the
investment be so that your investment will be worth your money? Present your answer in a
percent rounded to two decimal places (e.g., 34.56 for 34.566667%) *
1 point

45%
Your answer

You are preparing a valuation report on your business so that you can approach angel
investors to finance your business. You foresee losses of P1,000,000 and P300,000 for the first
and second years but earnings of P500,000 and P800,000 in the third and fourth years. From
the 5th until the 20th year, you expect to have average earnings of P1,200,000. Based on the
business risk exposures, you deem that a return of 22% is acceptable. If you are willing to
have 30% of the value of the firm to be financed by these angel investors, how much would
you be requesting from them? Round answer to the closest thousands of pesos. *
1 point

Your answer