Finance

1) A firm is considering replacement of an equipment, whose first cost is Rs. 4,000 and the scrap value is negligible at the end of any year. Based on experience, it was found that the maintenance cost is zero during the first year and it increases by Rs. 200 every year thereafter. (Compute for first 10 years of service to arrive at a conclusion) (a) When should the equipment be replaced if the discount rate is 0%? (b) When should the equipment be replaced if the discount rate is 12%?

EXPERT ANSWER

A survey is taken among customers of a fast-food restaurant to determine preference for hamburger or chicken. Of 200 respondents selected, 75 were children and 125 were adults. 120 preferred hamburger and 80 preferred chickens. 55 of the children preferred hamburger and 20 preferred chickens. Set up a 2×2 contingency table using this information and answer the following questions:

A survey is taken among customers of a fast-food restaurant to determine preference for hamburger or chicken. Of 200 respondents selected, 75 were children and 125 were adults. 120 preferred hamburger and 80 preferred chickens. 55 of the children preferred hamburger and 20 preferred chickens. Set up a 2×2 contingency table using this information and …

A survey is taken among customers of a fast-food restaurant to determine preference for hamburger or chicken. Of 200 respondents selected, 75 were children and 125 were adults. 120 preferred hamburger and 80 preferred chickens. 55 of the children preferred hamburger and 20 preferred chickens. Set up a 2×2 contingency table using this information and answer the following questions: Read More »

Conduct a Focus Group Discussion (FGD) among five of your friends in your neighborhood who are interested to have their own business in the future. The goal of your FGD is to generate new business ideas. Ask them what they have observed in the community or in other places that they have gone to so that they may have prospects on what are the products being bought or patronized which are not yet offered by other entrepreneurs in our locality.​

Conduct a Focus Group Discussion (FGD) among five of your friends in yourneighborhood who are interested to have their own business in the future. The goal of yourFGD is to generate new business ideas. Ask them what they have observed in the communityor in other places that they have gone to so that they may …

Conduct a Focus Group Discussion (FGD) among five of your friends in your neighborhood who are interested to have their own business in the future. The goal of your FGD is to generate new business ideas. Ask them what they have observed in the community or in other places that they have gone to so that they may have prospects on what are the products being bought or patronized which are not yet offered by other entrepreneurs in our locality.​ Read More »

Demand function for real money balance is =700−3r , where r is the interest rate in percent. The money supply is 1600 and the price level is N$45 . a) Graph the supply and demand for real money balances. [6 marks] b) What is the equilibrium interest rate in the money market? [3 marks] c) Assume that the price level is fixed. What happens to the equilibrium interest rate if the supply of money is reduced from 1600 to 1300? [6 marks]

EXPERT ANSWER Introduction Considering the information as we have, Explanation a. The supply and demand for real balances is given as shown b. At optimum we have, 700 – 3r* = 1600/45 = 35.56 So, r* = 221.48 c. Now we have, 700 – 3r* = 1300/45 = 28.89 So, r* = 223.7 Thus interest …

Demand function for real money balance is =700−3r , where r is the interest rate in percent. The money supply is 1600 and the price level is N$45 . a) Graph the supply and demand for real money balances. [6 marks] b) What is the equilibrium interest rate in the money market? [3 marks] c) Assume that the price level is fixed. What happens to the equilibrium interest rate if the supply of money is reduced from 1600 to 1300? [6 marks] Read More »

The Metalco Company desires to blend a new alloy of 40 percent tin, 35 percent zinc, and 25 percent lead from several available alloys having the following properties:

The Metalco Company desires to blend a new alloy of 40 percent tin, 35 percent zinc, and 25 percent lead from several available alloys having the following properties: The objective is to determine the proportions of these alloys that should be blended to produce the new alloy at a minimum cost. a) Formulate a linear …

The Metalco Company desires to blend a new alloy of 40 percent tin, 35 percent zinc, and 25 percent lead from several available alloys having the following properties: Read More »

An animal feed mix manufacturer would like to determine the optimal combination of the three basic ingredients in their final product. These three basic ingredients, their nutrient content (as a percentage value), and the unit costs are shown in the table below. Ingredient Limestone Corn Soybean meal Calcium 38% 0.1% 0.2% Protein 0% 9% 50% Fiber Unit cost cents/kg) 0% 10.0 2% 30.5 8% 90.0 The mixture must meet the following restrictions. • Calcium: at least 0.8% but not more than 1.2% • Protein: at least 22% • Fiber: at most 5%

EXPERT ANSWER

1.) One year ago, Super Star Closed-End Fund had an NAV of $10.40 and was selling at an 18% discount. Today, its NAV is $11.69 and it is prices at a 4% premium. During the year, Super Star paid dividends of $0.40 and had a capital gains distribution of $0.95. One the basis of this information, calculate each of the following:

1.) One year ago, Super Star Closed-End Fund had an NAV of $10.40 and was selling at an 18% discount. Today, its NAV is $11.69 and it is prices at a 4% premium. During the year, Super Star paid dividends of $0.40 and had a capital gains distribution of $0.95. One the basis of this …

1.) One year ago, Super Star Closed-End Fund had an NAV of $10.40 and was selling at an 18% discount. Today, its NAV is $11.69 and it is prices at a 4% premium. During the year, Super Star paid dividends of $0.40 and had a capital gains distribution of $0.95. One the basis of this information, calculate each of the following: Read More »

On 10 April 2021 Frederika buys Ashley’s car on condition that it passes a roadworthiness test before 20 April 2021. If the car passes the test, it will be delivered to Frederika on 21 April. The parties also agree that the purchase price of R80 000 will be paid in cash when delivery takes place on 21 April. The car passes the test on 15 April. On 19 April Ashley phones Frederika and informs her that the car was stolen the night before. Ashley insists that, despite the theft, Frederika still owes her the purchase price. What are the legal consequences in the following instances? (a) The car was stolen in Ashley’s driveway while she was fetching a parcel in the house. She had left the gate open, the key in the ignition and the engine running. (5) (b) The car was stolen out of Ashley’s locked garage. (7).

On 10 April 2021 Frederika buys Ashley’s car on condition that it passes a roadworthiness test before 20 April 2021. If the car passes the test, it will be delivered to Frederika on 21 April. The parties also agree that the purchase price of R80 000 will be paid in cash when delivery takes place …

On 10 April 2021 Frederika buys Ashley’s car on condition that it passes a roadworthiness test before 20 April 2021. If the car passes the test, it will be delivered to Frederika on 21 April. The parties also agree that the purchase price of R80 000 will be paid in cash when delivery takes place on 21 April. The car passes the test on 15 April. On 19 April Ashley phones Frederika and informs her that the car was stolen the night before. Ashley insists that, despite the theft, Frederika still owes her the purchase price. What are the legal consequences in the following instances? (a) The car was stolen in Ashley’s driveway while she was fetching a parcel in the house. She had left the gate open, the key in the ignition and the engine running. (5) (b) The car was stolen out of Ashley’s locked garage. (7). Read More »

Project Beta is a project which will last for 3 years and which requires an initial outlay of $6,000. This outlay will be depreciated using straight-line depreciation over the life of the project. It will generate incremental revenue of $12000 per year. The value of incremental, after-tax earnings is $3996 per year. The project will require Net Working Capital equal to 10% of incremental revenue. What is the value of incremental free cash flow in Year 0?

Project Beta is a project which will last for 3 years and which requires an initial outlay of $6,000. This outlay will be depreciated using straight-line depreciation over the life of the project. It will generate incremental revenue of $12000 per year. The value of incremental, after-tax earnings is $3996 per year. The project will …

Project Beta is a project which will last for 3 years and which requires an initial outlay of $6,000. This outlay will be depreciated using straight-line depreciation over the life of the project. It will generate incremental revenue of $12000 per year. The value of incremental, after-tax earnings is $3996 per year. The project will require Net Working Capital equal to 10% of incremental revenue. What is the value of incremental free cash flow in Year 0? Read More »

Suppose Asset A has an expected return of 10% and a standardard deviation of 20%. Asset B has an expected return of 16% and a stanbdard deviation of 40%. If the correlation between A and B is 0.35, what are the expected return and standard deviation for a portfolio consisting of 30% asset A and 70% asset B?

Suppose Asset A has an expected return of 10% and a standardard deviation of 20%. Asset B has an expected return of 16% and a stanbdard deviation of 40%. If the correlation between A and B is 0.35, what are the expected return and standard deviation for a portfolio consisting of 30% asset A and …

Suppose Asset A has an expected return of 10% and a standardard deviation of 20%. Asset B has an expected return of 16% and a stanbdard deviation of 40%. If the correlation between A and B is 0.35, what are the expected return and standard deviation for a portfolio consisting of 30% asset A and 70% asset B? Read More »