Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Financial Management Expert

problem1)

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%

REQUIRED:

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 planning to save for retirement over the next 30

You are planning to save for retirement over the next 30 years. To do this, you will invest $800 a month in a stock account and $400 a month in a bond account. The return of the stock account is expected to be 10 percent ...

Tim taylor has written a self improvement book that has the

Tim Taylor has written a self improvement book that has the following cost characteristics: Selling Price $16.00 per book Variable cost per unit: Production $4.00 Selling & administrative 2.00 Fixed costs: Production $96 ...

A person deposits 10400 in an account which earns 7

A person deposits $10400 in an account which earns 7% compounded quarterly. At the end of 2 years the person withdraws $2600, and at the end of 5 years they withdraw $3640. How much can be withdrawn at the end of 7 years ...

Future value larry james is planning to invest 25500 today

Future value: Larry James is planning to invest $25,500 today in a mutual fund that will provide a return of 0.10 each year. What will be the value of the investment in 10 years?

Assume that capital markets are perfect a firm finances its

Assume that capital markets are perfect. A firm finances its operations with $50 million in stock, with a required return of 15 percent, and $40 million in bonds, with a required return of 9 percent. Assume that the firm ...

A projection for a new product line was prepared by a task

A projection for a new product line was prepared by a task force from Engineering and Sales. The plan presented to management calls for an initial investment of $14,000,000 which is projected to generate annual revenue w ...

Assume that 3-month treasury bills totaling 32 billion were

Assume that 3-month Treasury bills totaling $32 billion were sold in $10,000 denominations at a discount rate of 6.650%. In addition, the Treasury Department sold 6-month bills totaling $30 billion at a discount rate of ...

Websters wants to introduce a new product that has a

Webster's wants to introduce a new product that has a startup cost of $15,000. The product has a 2-year life and will provide cash flows of $12,700 in Year 1 and $6,300 in Year 2. The required rate of return is 10 percen ...

Carlysle corporation has perpetual preferred stock

Carlysle Corporation has perpetual preferred stock outstanding that pays a constant annual dividend of $1.60 at the end of each year. If investors require an 10% return on the preferred stock, what is the price of the fi ...

Compare the average annual returns and standard deviations

Compare the average annual returns and standard deviations of annual returns of Coca-Cola (ticker: KO), FedEx Corp (FDX), and Motorola, Inc. (U:MOT) to those of a portfolio containing the three companies' stocks. Calcula ...

  • 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