Finance Answers

a) You have RM 33 750 in a brokerage account, and you plan to have an account totals

RM 72 863.72. You expect to earn 8% annually on the account. How many years will it take to reach your goal? (3 Marks)

b) If you deposit RM 27 590 in a bank account that pays 13% interest annually, how much will be in your account after 7 years? (2 Marks) c) How long does it take to double your money, given the interest rate is 10%? (2 Marks)

d) Find the amount to which RM 4000 will grow if it is 11% compounded quarterly for 7 years. (3 Marks)

e) It is now January 1 st 2015, and you will need RM 55 570 on January 1 st 2019, in 4 years. Your bank compounds interest at an 7% annual rate.

i) How much must you deposit today to have balance of RM 55 500 on January 1 st

2019? (2 Marks)

ii) How much do you have to deposit today if the bank uses semi-annually compounding? (3 Marks)

A company’s cost of equity is 21 percent and the before tax cost of debt is 14 percent. It has a

net worth of INR3400 crore and borrowings of INR1360 crore. The market capitalization of the

company is INR 5100 crore. The tax rate is 30 percent. What is the Weighted Average Cost of

Capital? What is a risk-free rate and its application in Valuing a Firm?

A company is currently paying a dividend of INR 5 per share. The dividend is expected to grow

at a 15 percent rate for three years, then at 10 percent rate for the next three years, after which it is

expected to grow at a 5 percent rate forever. What is the Present Value of the share if the capitalization

rate is 9 percent?

XYZ corp expects to earn $4.7 per share next year and plow back 46.81% of its earnings (i.e., it expects to pay out a dividend of $2.5 per share, representing 53.19% of its earnings). The dividends are expected to grow at a constant sustainable growth rate and the stocks are currently priced at $30 per share. How much of the stock's $30 price is reflected in Present Value of Growth Opportunities (PVGO) if the investors' required rate of return is 20%? $_________

On 3rd December,2021, the new Dawn government and the IMF mission to Zambia reached a staff level agreement on a programme under the IMF's Extended Credit Facility (ECF) that envisages provision of financial support of $1.4bn over the next three (3) years. Taking into account the anticipated IMF conditionalities, What implications will such an agreement have on the general economy outlook of Zambia? To what extent do you approve or disapprove such an agreement.

3. When can there arise a conflict between owners’ and managements’ goals? How does wealth maximization goal take care of this conflict?

4. What is agency relationship? Give some examples of potential agency problems between shareholders and managers.

5. Discuss the factors that motivate managers to act in the shareholders interest?

6. What role should the financial manager play in a modern enterprise?

7. Define the scope of financial management.

8. “Investment decision depends on financial decision” – Do you agree with this statement? Why or why not?

9. Why financial assets exist in an economy? Explain different forms of funds in an economy.

10. Why are financial markets essential for healthy economy?

11. Distinguish between primary and secondary markets.

12. “There are three types of market efficiency - strong, semi-strong and weak” – Explain.

13. Write short notes on:

i) Organized market

ii) Odd lot

iii) Third market

The operation of financial markets is deemed complex in so many aspects. Financial markets often experience crashes or shocks in their operations. Explain the causes of crashes or shocks in the financial markets

Central Bank of Kenya is playing a vital role in the growth of Kenya’s economy by encouraging savings and investment, as well as helping local and international companies’ access cost-effective capital. Defend your answer

What does the amortization schedule tell about a loan payment?

What are the four basic parts of the time value of money equation? Explain in detail.

If you increase the interest rate on an amortized loan, does the payment increase or decrease? why increase or why decrease?