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FIN2603-26-EX10

FIN2603-26-EX10

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Jefferson, the export manager of an international company, wishes to replace a machine five years from now with a new machine that will cost R500 000 in five years' time. If equal end-of-year deposits are made into an account paying an annual interest of 9%, calculate the size of each deposit.

If Adrian invests R20 000 in a unit trust offering a rate of return of 16% per annum, calculate how long it will take for the investment to reach R100 000.

The primary goal of a publicly-owned firm interested in serving its shareholders should be to ...

maximise the share price.

100%

maximise the EPS.

minimise the debt used by the firm.

maximise the expected net income.

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Which stakeholders have the first claim on assets when an organisation enters bankruptcy?

Any organisation that is managed in accordance with sound business principles should be able to enhance its probability of obtaining financial stability because it will ...

plan its cash inflows and outflows by means of a cash budget.

maximise its revenue from sales and control its expenses.

undertake all the above-mentioned financial measures.

100%

keep its cost of financing as low as possible.

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What is the main function of a financial manager?

To increase the value of ordinary shares.

To ensure liquidity and solvency.

100%

To prevent bad debts.

To earn returns greater than those of the competitors.

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Which of the following is a career opportunity in managerial finance?

Real estate and insurance

Personal financial planning

Investment management

Capital expenditures management

100%

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Blue Bay Ltd. has made an initial investment of R 500 000 in a new project. The firm’s cost of capital is 12%. The investment is expected to generate the following cash inflows over the next five years:Year 1: R 50 000; Year 2: R 60 000; Year 3: R 150 000; Year 4: R 140 000; Year 5: R 500 000;

The profitability index (PI) is ... ; therefore, the investment should ...

1.29; be undertaken.

1.29; not be undertaken.

1.14; be undertaken.

100%

1.14; not be undertaken.

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Mr Cilliers has arranged for a 60-day loan at an annual interest rate of 9.5%. If the loan amount is R1 000 000, how much interest will Mr Cilliers pay in rand terms? (Assume a 360-day year.)

R23 556

R45 000

R12 500

R15 833

100%

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Calculate the present value (PV) of R250 000 received five years from today at an interest rate of 11%.