Ask Question, Ask an Expert


Ask Financial Management Expert


1.1) Suppose you own 100 ‘Randfirst’ shares (a company listed on the Johannesburg Stock Exchange) which you intend to sell today. Since you will sell those shares in the secondary market, Randfirst will receive no direct cash flows as a consequence of your sale. Why should Randfirst’s management care about the price you get for your shares?

1.2) describe why the income statement is not a good representation of cash flow.

The following information should be used for problems 1.3, 1.4 and 1.5.

Market Marketers LTD                          2011  (R)                          2012 (R)
Sales                                                       740                                 785
Cost of goods sold                                   430                                 460
Interest expense                                        33                                   35
Dividends                                                   16                                   17
Depreciation                                             250                                 210
Cash                                                          70                                   75
Accounts receivables                                 563                                 502
Current liabilities                                        390                                 405
Inventory                                                 662                                 640
Long-term debt                                        340                                 410
Net non-current assets                          1 680                               1 413
Ordinary share capital                              700                                  235
Additional Information: Tax rate 28%


1.3) What is the change in net working capital from 2011 to 2012?

1.4 )What is the operating cash flow for 2012?

1.5) Why is interest expense excluded from the operating cash flow calculation?

problem2) To answer the following problems (2.1-2.7) it would be in your best interest to have mastered and to make use of a financial calculator. Where applicable, indicate in your answer book the key strokes (shown below) used in arriving at your answer:

N (number of periods); I(interest rate); PV(Present value); PMT (Payment); FV (Future value) Show all workings and round off your answers to the nearest whole cent(two decimal places) where necessary.

2.1) Susan invests R2 500 in a money market account every quarter and will withdraw the lump sum in 5 years’ time. If the account earns interest at 6% compounding quarterly, how much will her lump sum be in 5 years if she makes her first payment 3 months from now.

2.2) Briefly describe why present values decrease as the discount rate increases

2.3) Beatrice invests R1 000 in an account that pays 4% simple interest. How much more could she have earned over a five-year period if the interest had compounded annually?

2.4) Your grandmother invested one lump sum 17 years ago at 4, 25% interest compounding per annum . Today, she gave you the proceeds from that investment which totalled R5539, 92.
How much did your grandmother originally invest?

2.5) Forty years ago, your father invested R2 500. Today that investment is worth R107 921. What is the average rate of return your father earned on his investment?

2.6) An investment is made of R 3000 per quarter for 6 years at an annual interest rate of 8%, compounded quarterly.
Assuming each investment is made at the end of each quarter, what will be the accumulated value of these investments by the end of year 6?

2.7) You market antique matchboxes. One particular box increases in value at a rate of 5% compounding per year. Today, the matchbox is worth R29,50. How much additional money can you make if you wait ten years to sell it rather than selling it five years from now?

2.8) You are told that the effective interest rate is 10% p.a. and compounding occurs quarterly. What is the nominal interest rate?

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M93105

Have any Question? 

Related Questions in Financial Management

You are considering an investment in tar heel championship

You are considering an investment in Tar Heel Championship, LLC. You know the risk free rate is 2.0%, the expected return on the market portfolio is 9.2%, and the standard deviation of the market portfolio is 22.09%. You ...

Using capm a stock has a beta of 13 and an expected return

Using CAPM: A stock has a beta of 1.3 and an expected return of 15 percent. A risk free asset currently earns 5.5 percent. What is the expected return on a portfolio that is equally invested in the two assets? If a portf ...

Discuss the importance of option expense reporting within

Discuss the importance of option expense reporting within the income statement by the company. It is a very big issue for a prospective investor, yet some companies do not practice this reporting. Why?

You and your spouse are both 30 years old recently you had

You and your spouse are both 30 years old. Recently, you had your first child and you believe that now is the time to purchase life insurance. You currently owe $250,000 on your home and your take-home pay is $50,000 per ...

The market value of the equity of ginger inc is 740000 the

The market value of the equity of Ginger, Inc., is $740,000. The balance sheet shows $48,000 in cash and $236,500 in debt, while the income statement has EBIT of $105,500 and a total of $171,500 in depreciation and amort ...

1 how does international tax management affect corporate

1. How does international tax management affect corporate valuation. 2. Describe the trigger event for US tax liability for an unconsolidated foreign subsidiary. 3. How can tax management be used to influence cost of cap ...

1 a five-year bond pays interest annually the par value is

1. A five-year bond pays interest annually. The par value is $1,000 and the coupon rate equals 7 percent. If the market's required return on the bond is 8 percent, what is the bond's market price? 2. A bond that matures ...

The following is a table showing the calculation of

The following is a table showing the calculation of earnings per share as it appears in the 2009 financial statements of Microsoft Corporation. a. Why are there two earnings per share numbers reported? b. What does "Basi ...

Joe plans to deposit 200 at the end of each month into a

Joe plans to deposit $200 at the end of each month into a bank account for a period of 3 yr, after which he plans to deposit $300 at the end of each month into the same account for another 4 yr. If the bank pays interest ...

Metallica bearings inc is a young start-up company no

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years, because the firm needs to plow back its earnings to fuel growth. The company will then pay a dividen ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro