In May 2025
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A man spent one fifth of his money at the butchers and one third of his money at the supermarket. He had £5.60 left. How much did he start with?
1. Cummins India Ltd has the following capital structure, which it considers optimal:
Debt 25%
Preference Shares 10%
Equity shares 65%
Total 100%
Applicable tax rate for the company is 25%. Risk free rate of return is 6%, average equity market investment has expected rate of return of 12%. The company’s beta is 1.10. Following terms would apply to new securities being issued as follows:
1. New preference can be issued at a face value of Rs. 100 per share, dividend and cost of issuance will be Rs. 10 per share and Rs. 2 per share respectively.
2. Debt will bear an interest rate of 9%.
Calculate
- component cost of debt, preference shares and equity shares assuming that the company does not issue any additional equity shares.
- WACC.
Note - Proper calculations required in each step
Phathu needs R10 500 in ten months’ time to buy herself a new lens for her camera. Two months ago she deposited R9000 in a savings account at a simple interest rate of 11,5% per year. How much money will
Phathu
still need to buy the lens ten months from now?
A loan of 15,000 is repaid by level repayments at the end of each month for 8 years. The effective annual rate of interest is 5%. Calculate:
a) The monthly repayment.
b) The capital outstanding at the end of the fourth year after the repayment has been made.
c) The interest and capital components of the 49th
instalment.
Integrated Potato chips paid a $2 per share dividend yesterday. It is expected to grow steadily at the rate of 4% per year.
a. What is expected dividend in each of next 3 years?
b. If the discount rate of the stock is 12%. At what price will the stock sell if the forecasted price at the end of third year is $20?
c. What is the expected price after 3 years if today it is selling for $15?
4. A company paid dividend $12. Company is expected to grow the dividend at 10% per year for next 3 years and then at 6% per year forever. What is the price of stock at the end of third year if your discount rate is 14%?
Consider the following small open economy model with production. At dates 1 and 2, the home country receives exogenous fixed endowments y1 and y2 respectively. The home country has access to the international capital market at a fixed interest rate r* at which it can save or borrow. Let the net saving of the home country be s1 and its consumption stream in two periods be given by
c1 and c2 respectively.the following maximization problem:
Max ln c1 + ln c2
s.t. C1 + S1 = Y1
C2 = C1(1+r*) + Y2
Derive optimal consumption and current account functions and carefully interpret it in terms of a two-period Fisherian graph.
Refer to (a). Suppose the home country also has an access to an investment
technology which means that if it invests k units at date 1, it produces y2 = Aka units of output
in the next period where A >0 and 0 < a< 1 . Modify budget constraints for (a)Derive the optimal investment and saving rules for this
economy assuming the same logarithmic utility function as in (a). Interpret your results
Fisokuhle has a textbook loan that was supposed to be paid in two payments of R1637 due six months ago and R1746 due in nine months from now. Instead he renegotiate to pay R622 today and the balance in three months, therefore the settlement is at month three. The debts and payments are subject to the same interest rate of 9% per annum compounded quarterly. Represented in a timeline what is the value of X (month three)
Matome borrows R4 050 for eight months from a lender who charges a 11% discount rate. What size loan should Matome ask for in order to receive R4 050 cash?
Matome borrows R4 050 for eight months from a lender who charges a 11% discount rate. How much money does Matome receive?
An amount of R3 450 earns simple interest and accumulates to R5623, 50 after seven years. Had the yearly interest rate been 2% more, how much interest would he have accumulated in seven years
