Finance Answers

Question 4 (25 Marks)

The South African government depends on the South African Revenues Services (SARS) for the 

collection of tax revenue for the ever increasing public expenditure. COVID-19 made all government 

sof the world over to resort to lockdowns to curb the spread of the disease. The lockdowns have a 

direct effect of reducing business activities and hence, decrease in revenue collections. Citizens 

willingness to pay tax largely depends on the perceptions the public have on the tax system, 

Critically discuss any 7 requirements of a good tax system.

Differentiate between social equity and social equality and indicate which of the two is required 

for improvement in social welfare in a country that has a history of inequality. 

 (5)

2.1. Critically discuss any three Macroeconomic and at least two Microeconomic reasons for growth 

in government expenditure. 

(20)

Question 3 (25 Marks)

Differentiate between private goods and public goods and then illustrate and discuss why in the 

provision of private good the summation is horizontal while it is vertical in the case of the provision 

of public good.

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2.1 Differentiate between social equity and social equality and indicate which of the two is required for improvement in social welfare in a country that has a history of inequality. (5)

2.1. Critically discuss any three Macroeconomic and at least two Microeconomic reasons for growth in government expenditure. 

After graduation, you work as a Financial Analyst in a reputable multinational company in Kuala Lumpur. Your superior has assigned you a new task. You are required to analyse the following bonds.

Company | Petron Berhad | Shell Corporation

Coupon rate per annum | 10% | 10%

Maturity in years | 15 | 10

Face value per bond | $1,000 | $1,000

Yield to maturity per annum | 11% | 13%

Current selling price per bond | $900 | $1,100

Based on the above information, you are required to:

a) Compute the current bond prices for both companies if the interest payment is once a year.

b) Based on the above result, provide your conclusion.

c) Discuss three main differences between conventional bond and Islamic bond

After graduation, you work as a Financial Analyst in a reputable multinational company in Kuala Lumpur. Your superior has assigned you a new task. You are required to analyse the following bonds.

• Company | Petron Berhad | Shell Corporation

Coupon rate per annum | 10% | 10%

Maturity in years | 15 | 10

Face value per bond | $1,000 | $1,000

Yield to maturity per annum | 11% | 13%

Current selling price per bond | $900 | $1,100

Based on the above information, you are required to:

a) Compute the current bond prices for both companies if the interest payment is once a year.

b) Based on the above result, provide your conclusion.

c) Discuss three main differences between conventional bond and Islamic bond

Mr mdlalose starts his own business and takes out a loan of R450 000

He repays the loan in four equal annual installments starting one year after the loan was granted

Calculate his annual repayments if the interest charged on the outstanding balance is 10% p.a. compounded annually

Mr Makhani has just retired and received R1000 000 net lump sum income from his employer. He decided to spend it all on a tree farm, he planted pine trees for plumbing materials. Environmental Economists argue that planting trees produces market failure as the market fails to consider positive production spillover effects generated by CO2 capturing effect of tree plantations. With the aid of suitable diagrams, illustrate and discuss the positive external effect of Mr. Makhani’s business and indicate the necessary intervention by Government aimed at internalizing the effect of such spillovers. 

Differentiate between private goods and public goods and then illustrate and discuss why in the provision of private good the summation is horizontal while it is vertical in the case of the provision of public good

Critically discuss any three Macroeconomic and at least two Microeconomic reasons for growth in government expenditure.   

Differentiate between social equity and social equality and indicate which of the two is required for improvement in social welfare in a country that has a history of inequality