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Finance
You discover an antique in your attic that you purchased at an estate sale 10 years
ago for RM400. You auction it on eBay and receive RM8,000 for your item. What
annual rate of return did you earn?
ago for RM400. You auction it on eBay and receive RM8,000 for your item. What
annual rate of return did you earn?
Finance
A number of publicly traded firms pay no dividends to their shareholders yet investors
are willing to buy shares in these firms. How is this possible? Does this violate our
basic principle of stock valuation? Explain your answer.
are willing to buy shares in these firms. How is this possible? Does this violate our
basic principle of stock valuation? Explain your answer.
Finance
By using suitable examples, discuss the differences between periodic rate, nominal
rate and effective rate.
rate and effective rate.
Finance
What is meant by unsystematic risk? How is it different from the systematic risk?
Describe the sources of unsystematic risk. What will the required rate of return be
when the level of systematic is high?
Describe the sources of unsystematic risk. What will the required rate of return be
when the level of systematic is high?
Finance
When do companies incur the agency costs? Support your answer by giving an
example.
example.
Finance
When do companies incur the agency costs? Support your answer by giving an
example.
example.
Finance
Discuss TWO drawbacks of using payback period method to evaluate projects
Finance
Tanjong Inc. is considering two mutually exclusive projects, A and B. Project A costs
RM95,000 and is expected to generate RM65,000 in year one and RM75,000 in year
two. Project B costs RM120,000 and is expected to generate RM64,000 in year one,
RM67,000 in year two, RM56,000 in year three, and RM45,000 in year four. Tanjong
Inc.'s required rate of return for these projects is 10%. Calculate the profitability index
for Project A and Project B. Which project is better?
RM95,000 and is expected to generate RM65,000 in year one and RM75,000 in year
two. Project B costs RM120,000 and is expected to generate RM64,000 in year one,
RM67,000 in year two, RM56,000 in year three, and RM45,000 in year four. Tanjong
Inc.'s required rate of return for these projects is 10%. Calculate the profitability index
for Project A and Project B. Which project is better?
Finance
Dunia Construction Co. (DCC) is considering a new inventory system that will cost
RM750,000. The system is expected to generate positive cash flows over the next
four years in the amounts of RM350,000 in year one, RM325,000 in year two,
RM150,000 in year three, and RM180,000 in year four. DCC's required rate of return
is 8%.
i. What is the net present value of this project?
ii. What is the internal rate of return of this project?
iii. What is the modified internal rate of return of this project?
RM750,000. The system is expected to generate positive cash flows over the next
four years in the amounts of RM350,000 in year one, RM325,000 in year two,
RM150,000 in year three, and RM180,000 in year four. DCC's required rate of return
is 8%.
i. What is the net present value of this project?
ii. What is the internal rate of return of this project?
iii. What is the modified internal rate of return of this project?
Finance
Fendy purchased 800 shares of Grandsports’ stock at RM3 per share on 1/1/12. He
sold the shares on 12/31/12 for RM3.45. Grandsports’ stock has a beta of 1.9, the
risk-free rate of return is 4%, and the market risk premium is 9%. What is Fendy's
holding period return?
sold the shares on 12/31/12 for RM3.45. Grandsports’ stock has a beta of 1.9, the
risk-free rate of return is 4%, and the market risk premium is 9%. What is Fendy's
holding period return?
