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Today is repayment day and repayment amount is 5420,00.
We need to calculate the rate of compound interest. (accuracy 0.001%) using English practice.
Grameen Phone (GP) is planning to finance a project using the following weights: 35% long term debt, 15% preferred stock and 50% common stock equity. The firm’s tax rate is 40%
I. The firm can sell for Tk. 970 and 12 years bond, Tk. 1000 par-value bond paying at a 13% coupon rate. A floatation cost of 2% of par value is required.
II. Eight percent (annual dividend) preferred stock having a par value of Tk. 100 can be sold for Tk. 88. An additional fee of Tk. 5 per share must be paid to the underwriters.
III. The firm’s common stock currently selling for Tk. 68 per share. The dividend expected to be paid at the end of the year is Tk. 5 per share. Dividend have been growing at an annual rate of 8%, firm must also pay Tk. 3 per share in flotation cost.
a. Calculate the WACC of the project and the significance of WACC for project investment decision.
b. Differentiate between independent and mutually exclusive projects.
Bank of Kigali agrees to repay the floating Ribor(Rwanda interbank offered rate) rate to Equity bank. How much will Equity bank pays to Bank of Kigali and vice-versa?
TC1 = 40 + 0.1q1 + 0.04q2
TC2 = 18 + 3q2 + 0.02q2 2
TC3 = 30 + 4q3 + 0.01q2 3
and faces the market demand schedule p = 250 − 2q where q = q1 + q2 + q3
Set up the profit function and then use it to determine how much the firm should make in each plant to maximize profit, using the Hessian to check that second-order conditions are met.
A one-year Japanese security is currently yielding 5%. Furthermore, it is expected that the exchange rate between the dollar and the yen is changing from 98 yen to the dollar, to 95 yen to the dollar over the next year. To invest in U.S. security rather than Japanese security, you would need a return at least equal to what value?
(i) How much must you deposit 1 year from now to have a balance of Sh.100, 000 at Year 4? [2 marks]
(ii) If you want to make equal payments at the end of Years 1 through 4 to accumulate the Sh.100, 000, how large must each of the 4 payments be?
