Economics Answers

How can Kwa Zulu natal can Establish a culture of improved service delivery?

1. What is an investment?

2. Which factors one should take into consideration before making an investment?

3.Advantages and disadvantages of an investment.

Discuss some ways in which COVID-19 Unemployment Assistance from the Fijian Government help the formal and informal employees during this pandemic.

A country experiences a decrease in the price level and a rise in real output. What combination of the 

changes in aggregate demand and supply would generate this outcome?

A. A decrease in aggregate demand but no change in aggregate supply.

B. An increase in aggregate supply but no change in aggregate demand.

C. A decrease in aggregate supply.

D. An decrease in both aggregate demand and aggregate supply.

a) Frenzi Communications Inc. (FCI) has the following capital structure, which it considers to be optimal: debt = 25%, preferred stock = 15%, and common stock = 60%. FCI’s tax rate is 40%, and investors expect earnings and dividends to grow at a constant rate of 6% in the future. FCI paid a dividend of Gh₵3.70 per share last year (D0), and its stock currently sells at a price of Gh₵60 per share. Ten-year Treasury bonds yield 6%, the market risk premium is 5%, and FCI’s beta is 1.3. The following terms would apply to new security offerings. Preferred: New preferred could be sold to the public at a price of Gh₵100 per share, with a dividend of Gh₵9. Flotation costs of Gh₵5 per share would be incurred. Debt: Debt could be sold at an interest rate of 9%. Common: New common equity will be raised only by retaining earnings. i. Find the component costs of debt, preferred stock, and common stock. (9 marks) ii. What is the WACC? b) Identify and describe the phases of capital budgeting.

Examine how the concepts of agency theory can be used to explain the relationship that exists between the managers of a listed company and its shareholders. Your answer should include an explanation of the following : i. asymmetry of information; [5 marks] ii. agency costs; [5 marks] b) The primary financial objective of a business is stated by corporate finance theory to be maximising shareholder wealth as against profit maximisation, sales maximisation, and maximisation of benefit to employees and the local community. Provide a reasoned argument in support that wealth maximisation should be the main goal of the financial manager. [15 marks

Agyawadwo Ltd wants to raise equity capital for a new project. Upon some financial consultation with ABC financial advisors, they have learnt that right issues, retained earnings and private placement are very popular and important methods for raising equity capital but there is disagreement among management as to which method should be used. Required a) Discuss how these three methods compare broadly in terms of the amount that can be raised, the cost of issue, dilution of control, degree of under-pricing, and market perception? [13 marks] b) Examine any three factors that could influence a business for the choice of equity finance or debt finance. [12 marks]