Financial Math Answers

For a business firm leverage is about the fixed operating cost and the fixed finance costs

in the cost structure of the firm. For the given details, identify for which firm the degree

of operating leverage and degree of financial leverage are higher and why so:

Firms Amrit Baayu

Sales (Rs.) 3,60,000 7,50,000

Variable cost p.u 20 150

Fixed cost (Rs.) 72,000 1,40,000

Output (units) 6,000 1,500

Interest 40,000 80,00

For a business firm leverage is about the fixed operating cost and the fixed finance costs

in the cost structure of the firm. For the given details, identify for which firm the degree

of operating leverage and degree of financial leverage are higher and why so:

Firms Amrit Baayu

Sales (Rs.)

Variable cost p.u

Fixed cost (Rs.)

Output (units)

Interest

3,60,000

20

72,000

6,000

40,000

7,50,000

150

1,40,000

1,500

80,000

3.

An investment with an initial outlay of R500 000 generates five successive annual cash inflows of R75 000, R190 000, R40 000, R150 000 and R180 000 respectively. The cost of capital K is 10% per annum.

The net present value (NPV) is approximately

An investment with an initial outlay of R500 000 generates five successive annual cash inflows of R75 000, R190 000, R40 000, R150 000 and R180 000 respectively. The cost of capital K is 10% per annum. The internal rate of return (IRR) is

Given the following information, calculate the four year forward rate.

Rate for 4-year maturity bond = 8%

Rate for 3-year maturity bond = 8%,

How much money should you invest now to have $5,000.00 in 12 years if you invest the money at a rate of 9.6%, compounded semiannually?

On his trip to London , mark decides to buy a tablet from a computer store. The tablet costs 10 000 in South Africa . How much is this in pounds if the exchange rate on the day is £1= R17 , 30

Kaira is the secretary to the president and she receives a basic monthly pay of P29,750.00. She is a granted a meal allowance of P1,050.00 and clothing allowance of P2,000.00 per month. Her deductions are 3.63% for SSS based on her basic monthly pay, P200.00 for Philhealth, P4,167.00 + 20% over P15,850.00 for withholding tax, and 2% for PAG-IBIG based on gross earnings. Compute her gross earnings and net pay for the month of November.

Project costs Rs 180,000 and is expected to generate cash inflows as:

Year Cash Inflow ( Rs )

1 20000

2 24000

3 30000

4 36000

5 40000

a. Discuss the characteristics of long term capital budgeting decisions

b. calculate the Net Present Value of the project if the cost of capital is 12% and conclude.