Finance Answers

Your bank account pays a nominal interest rate of 8%, compounded quarterly. You deposit $500 in the account today, and deposit $1,000 in the account at the end of the first year. How much will you have in the account at the end of the first year?

1.1 Suppose you buy a round lot of MM Industries stock on 55 percent margin when the stock is selling at $20 a share. The broker charges a 10 percent annual interest rate, and commissions are 3 percent of the total stock value on both the purchase and sale. A year later, you receive a $0.50 per share dividend and sell the stock for 27. What is your rate of return on the investment?

Find the IRR of the following investments and determine which should be accepted, given a

required rate of return of 10%:

Investment A: An investment costing $31,140 promising a cash flow of $3,000 per year for 15

years.

Investment B: An investment costing $46,000 promising a cash flow of $6,000 per year for 20

years.

DESCRIBE the process followed at your bank to capture, assess and use client information for sales purposes

Omwando PLC had 400,000 9% redeemable preference shares of £1.00 per share in issue, originally issued at a premium of £0.40 per share.

The company now proposes to redeem 100,000 of these shares at £1.60 per share, financed partially by the issue of 80,000 ordinary shares of £1.00 per share at £1.20

Prior to the issue of replacement shares, the share premium account had a credit balance of £121,000.

Required:

Show the amount of premium payable on redemption to be apportioned from

a.      Share premium account and

b.     Distributable profits

c.      Show the amount, if any, to be transferred to Capital Redemption Reserve as the result of the redemption.

d.     Show journal entries necessary to record above transactions. (Total: 20marks)

Suppose the regulator asks one of the losses making Bank XYZ to close a few branches

to reduce cost thereby make the bank more sustainable/profitable. But XYZ Bank

refuses to close its few branches, citing some risk/s involved in the process. What are

the risks XYZ Bank perceives if it closes a few branches?

Which are the major risks banks are exposed to and how they mitigate it?

Credit appraisal is a critical analytical tool of bank. Largely the profitability of bank

hinges on this tool. Any weakness on this front is reflected on the profitability of banks

and it also results in accumulation of stressed assets. BASEL-II has given strong

recommendations to check this menace. Elaborate in details the important

recommendations of this committee.

One of the important mandate of RBI is prudent management of monetary policy,

curbing inflation and checking unemployment in economy. Explain how RBI achieves

these diverse parameters by use of different tools available with it.

Sonja Cc is a small firm that make outfits for customers tailored for their functions, in May 2021 she was order for a baby shower (BS).

The details Job for BS are as follows:

Direct materials: 120 units at N124

Direct labour: 20 hours for department A at N$25 per hour.

10 hours for department B at N30 per hour

12 hour s for department C at N$27.50

The firm allocates manufacturing overheads budgeted at N$2500 in department A, N$2000 in department B and N$3000 in department C.

The firm expects a profit of 55% on the total cost of BS.

Required:

a)Calculate the cost of a baby shower (BS)

b)Calculate the selling price of a baby shower (BS)

c)If the number of outfits are the same for each type of function, which function should Sonja choose to produce and why?