Financial Math Answers

Investment decisions cannot be affected by

Select one:

a. Expected rate of return

b. Cost of capital goods

c. Interest rate

d. None of the options are correct

Which one of the following is NOT a possible relationship between income and spending

Select one:

a. None is a relationship

b. Income is higher than spending

c. Income equals the level of spending

d. Spending is higher than income

One of the following best explains consumption spending

Select one:

a. Spending on infrastructure

b. None of the option are correct

c. Spending on capital goods

d. Spending on final consumer goods

Company A makes an operating profit margin of 5 % on sales of R2.5 million. Company B has sales that are 20% higher than Company A and achieves an operating profit margin of 3.5%. Which company makes the highest operating profit?

Select one:

a. Company A

b. Not possible to calculate

c. Both make the same operating profit

d. Company B

SISA Ltd is a company with 40 000 authorised Ordinary Share Capital with a par value of R1. The company issued 30 000 shares at R1.30 for each share. What would be the effect of this transaction in SISA’s records?

Select one:

a. Ordinary share capital will increase by R39 000 and share premium will increase by R9 000.

b. Ordinary share capital will increase by R30 000 and share premium will increase by R39 000.

c. Ordinary share capital will increase by R39 000 and share premium will be unaffected.

d. Ordinary share capital will increase by R30 000 and share premium will increase by R9 000.

Starting in 7 years and 9 months you want to be able to withdraw $1700 at the beginning of every month. You deposit $100 000.00 immediately and then let it grow at a rate of 6.41% compounded quarterly. For how many years will you be able to withdraw these payments?

What amount should be recorded as loss on the early extinguishment of the bonds

Zelda borrowed R5760,00

 from a bank for 21 months. For the discount loan she only received R4752,00

. Determine: 

    (i)   the yearly discount rate, d

    (ii)   the equivalent yearly simple interest rate, i

Give the answers as percentages and round them to two decimal places.

Use the information provided below to calculate the rate at which the net cash flow of a capital project envisaged by Mike’s Farm must be discounted. Capital structure= 60% own capital and 40% loan capital. Composition of a loan Capital = 30% short term, 40% Medium-term and 30% Long term loan capital. Present interest rates = 20%, 18% and 14% per year on short, medium and long term loans respectively. After tax rate of return on own capital = 12%. Marginal tax rate =19%