Finance Answers

A man borrowed P200,000 from a bank at 12% compounded monthly, which is payable monthly for 10 years (120 payments). If the first payment is to be made after 3 months, how much is the monthly payment?

What is the present worth of a P100 annuity starting at the end of the third year and continuing to the end of the fourth year, if the annual interest rate is 8%?

Discuss briefly two objectives of risk management [4marks]

Lemons

Most of us have had the experience of purchasing a product that turned out to be a lemon - a product that did not live up to what it was supposed to be. According to Wikipedia; Lemon laws are laws that help provide consumers with a remedy for purchases of automobiles and other consumer goods in order to compensate consumers for products that repeatedly fail to meet standards of performance and quality.

The history of lemon laws came from the British who used the term “lemon” to refer to both a fruit and to a product of substandard quality. America started using the term lemon in 1909 to refer to something worthless.

Actions to Take:

Think of a purchase you have made that you felt was a "lemon," a product of substandard quality. How important are warranties to you in buying a product? How important is a business's return and customer service policy in buying a product? Please share your experience and how important warranties and customer service is to you in the purchase of a product.

1.     Analyze the following transaction for Surprise Ltd. Using the concept of Accounting Equation comprising of Assets, Liabilities and Equity.

1.     Commenced business with cash of Rs. 5,00,000.

2.     Purchased equipment for cash Rs. 2,00,000.

3.     Purchased furniture worth Rs. 50,000 on credit from IndiMart.

4.     Purchased raw materials for Rs 25,000 against cash from XYZ Suppliers.

5.     Deposited cash of Rs. 1,25,000 in the current account.

Solid goods for Rs. 75,000 and received a cheque against the same.

Kindly Give detail answer concept of Accounting Equation and below transaction with format

Briefly describe three differences between futures and forwards [9 marks]

GoGo Airline's parent company is planning to take a cautious approach in launching MegaSaver. In response to the concerns raised by several shareholders, the parent company is exploring the possibilities of dividing its airline business into two distinct departments and monitoring the working capital of the new airline to prevent any liquidity crises.

The parent company has requested that you prepare a report which can enable it to make an informed decision. You are required to include the following information in the report:

· Critical evaluation of the advantages and disadvantages of divisionalisation to the parent company

· Explanation of various techniques the parent company can use to measure the performance of the proposed divisions and divisional managers

Q1.

George swala entered FNB with 400 thousand kwacha with a view to deposit money.He produced a 100 thousand kwacha and gave the teller wzho credited it to swalaz account. Before Swala could produce another 100 thousand the bank was stormed by armed robbers,who stole the 100 thousand which was credited to to Swalaz account by the bank,but still kept by the teller,thy also stole the 300 thousand in possession of swala. Swala approached the bank manager to give him the deposit the entire 400 thousand on the premise that he had already entered the bank and that the money was stolen in the bank. Therefore the money which was stolen was for the bank and not for Swala. The manager responded that all the money stollen was for Swala and that the bank is not liable.

Swala approaches your law firm styled FCK chambers for legal advice..Adivise Swala.

Rahman is considering to independent projects, Project A and Project B. The

initial cash outlay associated with Project A is RM50,000 and the project

would generate cash flows of RM12,000 per year for six years. While the

initial outlay for Project B would be RM70,000 with generate cash flows of

RM13,000 per year for ten years. The discount rate on both projects is 12

percent. Calculate Internal Rate of Return (IRR) for each project and indicate

if the project should be accepted or not