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Please provide the importance of cash flow
5. You can do this for bonus.Regress crime, lnox, rooms, dist and stratio on lprice and (5 marks) (a) Specify the regression equation (b) interpret the lnox and stratio parameters (c) Using the gooddenss of fit-test and the F-statistic, explain whether or not this model is a good fit.
2. Briefly explain the following concepts: (9 marks) (a) Consistency of the slope parameter in a simple regression when all assumptions hold. Show mathematically. (b) The t-statics in making inferences as compared to the use of the p-values. (c) Mathematically explain the interpretation of the log-levels and levels-log regression functions.
Given the data below,
find the time path of national income Yt
check your answer, using t=0 and t = 1 and
comment on the stability of the time path
Using the information below,
Determine:
the market price, Pt in any time period,
the equilibrium price Pe
the stability of the path and
check your answer using t = 0 and t = 1.
b) Demand function is given by
Find the interval of prices for which demand is positive.
Express total revenue TR = PQ as a function of price. When is total revenue maximized?
For which price is the own-price elasticity equal to -1?
b) Demand function is given by
Find the interval of prices for which demand is positive.
Express total revenue TR = PQ as a function of price. When is total
find the time path of national income Yt
check your answer, using t=0 and t = 1 and
comment on the stability of the time path
Using the information below,
Determine:
the market price, Pt in any time period,
the equilibrium price Pe
the stability of the path and
check your answer using t = 0 and t = 1.
2. Where is TP=0 and what happens to MP curve at a point.
3. Based on your analysis in (2 ) explain the relationship between TP, MPP and the APP.
4. Calculate the elasticities of production
5. Where does the law of diminishing returns set in?explain your answer using a graph
Why is the dividend decision one of the major areas that a finance manager should pay particular attention to? What considerations must be taken into account when setting a dividend policy of a company? (12 marks)
A company’s sources of long-term funds include bonds, preferred stock and common stock. Identify some financing risks associated with these sources and explain how these risks affect the return expected from investments financed by these sources. (13 marks)
A worldwide cosmetics company can upgrade the quality of one of its products by purchasing new equipment at a cost of K155,000. The new equipment would replace old equipment that has a current market value of K23,000. The old equipment originally cost K180,000 and was three quarters depreciated. If the old equipment was used for an additional 12 years, its salvage value at that time would be K5,000. The new equipment has an expected life of 12 years. Its salvage value is estimated at K30,000.
By upgrading the quality, the company would be able to increase the sale price. As a result, the operating income before tax will increase by K20,000 per year for the first 3 years, and by K25,000 per year during the last 9 years.
The company’s tax rate is 40% and its cost of capital after tax is 15%. Depreciation is on straight line basis.
Required
Compute NPV and the internal rate of return (IRR) for the investment and state whether the company should proceed with the investment. (25 marks)
