Finance Answers

OSAC’s stock is currently selling for $40 per share . The dividend is expected to increase at a constant rate of 7.50% per year and rs, is 9.00%. What is the stock's expected price 3 years from today?

You have decided to endow Faculty of Business, Dokuz Eylul University with a scholarship. It is expected to cost ​$6,000 per year to attend the university into perpetuity. You expect to give the university the endowment in 6 years and will accumulate it by making equal annual​ (end-of-year) deposits into an account. The rate of interest is expected to be 13​% for all future time periods.

a. How large must the endowment​ be?

b. How much must you deposit at the end of each of the next 6 years to accumulate the required​ amount?

You decide to begin saving toward the purchase of a new car in 5 years. If you put $1.000 at the end of each of the next 5 years in a saving account paying 6 percent compounded annually, how much will you accumulate after 5 years? What would be the ending amount if the payment were made at the beginning of each year? What would be the ending amount if $500 payments were made at the end of each of 6-month period for 5 years and the account paid 6 percent compounded semiannually?

Suppose you are estimating parameters of the following regression model:

Ŷt = 9941 + 0.25 X2t+ 15125 X3t

(6114) (0.121) (7349)

R 2= 0.87, RSS = 10310

(The figures in parentheses are the estimated standard errors. RSS are residual sum of squares.)

(i) Comment on the signs of the variables in the model.

(ii) Interpret and explain individual coefficients.

(iii) Suppose X3 increases by 0.25; what is the expected impact of this change on Y?

(iv) Comment on the explanatory power of the regression.

(v) Using t-tests show whether individual coefficients are significantly different from zero at 5% level of significance.

(vi) Test whether the coefficient of X2 is significantly different from 1 at 5% level of significance.

(vii) Carry out an appropriate test to check if coefficients are jointly significant.

Critically discuss, with the aid

of diagrams the conditional no -matching grants with unconditional nonmatching grant (25 marks)

Discuss positive externality in 

consumption. With suitable diagrams,

As a result of imbalance in revenue generation by provincial governments and local municipalities in 

South Africa, intergovernmental grants have been a important source of finance for Local 

Governments. The allocations of these funds for use in the local authorities have been questionable, 

some doubting if the funds are use for what they were earmarked for. Critically discuss, with the aid

of diagrams the conditional no -matching grants with unconditional nonmatching grant

Animax sells 150 000 units of dog food to retail stores. The cost to the company is $25 per unit. The cost of processing each order is $260 and the carrying cost is $4.50 per unit. Required:

Using the EOQ model, calculate the quantity the company should order at a time.

The National Company has just been formed. They have a patented process which will make them the sole suppliers of Product A.

 During the first year the capacity of their plant will be 9,000 units and this is the amount they will be able to sell.

Their costs are:

Direct Labor = £15 per unit

Raw material = £5 per unit

Other variable costs = £10 per unit

Fixed costs = £240,000

Required:

(a). If the company wishes to make a profit of £210,000 during the first year, what should be the selling price? What is the contribution margin at this price?

(b). If at the end of first year, they wish to increase their volume and an increase or £100,000 in the annual fixed costs will increase their capacity to 50,000 units, how many units will they have to sell to realise a profit of £760,000, if their selling price is £70 per unit and no other costs change, except that invest £500,000 in advertising with a view to achieve this end?