USP

THE UNIVERSITY OF THE

SOUTH PACIFIC

AF208: FINANCIAL MANAGEMENT

SCHOOL OF ACCOUNTING AND FINANCE

Final Examination
Semester 2,2015

On-Campus Mode
Duration of Exam: 3 hours + 10 minutes

Reading Time: 10 minutes

Writing Time: 3 hours

Instructions:

1. This paper has a Section A and a Section B. Both Sections are compulsory.
2. Answer all your questions in the answer booklet provided.
3. This examination comprises 50 % of overall mark. There is minimum exam mark
of 20/50.
4. There are 15 pages to this examination paper.
5. This is a closed book examination.
6. Materials allowed (Only calculator)
7. Relevant formulas are provided on pages 12 & 13
8. Present value tables are provided on pages 14 & 15.

1
 Section A: Multiple Choices (30 marks)

1. A company has recently paid an annual dividend of $1.30 per share. What is the after-tax
cost of retained earnings if dividends are expected to grow indefinitely at the rate of 8%
pa and the shares are currently priced at $28.08?

a. 12.63%
b. 4.63%
c. 13.00%
d. 5.00%

2. A company's share price is currently $4.72. Its most recent dividend was 50 cents per
share; dividends are expected to grow indefinitely at a rate of 4% pa and the tax rate is
30%. The company's before-tax cost of retained earnings is:

a. 19.74%
b. 19.13%
c. 14.59%
d. 15.02%

3. A 3-year zero-coupon bond with a face value of $1 00000 was issued at an interest rate of
10% p.a. compounded semi-annually. The net proceeds from this bond issue were:

a. $74622
b. $71 890
c. $65823
d. $72 099.

4. A project has an initial outlay of $400 000, net operating cash flows of $75 000 for 4
years and a tenninal value of $60000. If the hurdle rate is 20% pa, with semi-annual
payments, the project's net present value (NPV) is:

a. $28 110
b. $428 110
c. $223098
d. $400 119

2
5. A project has an initial outflow of $400000. However, the project will generate an
instantaneous inflow of $150 000. The project will generate a net inflow of $2000000
next year, an outflow of -$1 00 000 the year after. In the following year, a terminal value
of $50 000 is expected to be realised. Given a cost of capital of 15%, the expected NPV
ofthis project is:

a. $1 698230
b. $1 509873
c. $1 446392
d. $1 289094

6. A project's initial cost is $100000. The project is expected to generate net cash inflows
of$IOO 000 for each year for the next 50 years. The project's terminal value is estimated
to be $20 000. Assuming a cost of capital of 10%, the expected NPV of this project is:

a. $891 652
b. $778932
c. $666093
d. $887 152

7. A firm purchases on credit. Credit terms require settlement by the end of the month
following the month of invoicing, but a discount of 2% is offered for settlement within 7
days of invoicing. The firm decides to take the prompt settlement discount on all invoices
received after the 20th day of the month. What is the cost of forgoing the discount on the
other invoices (assuming an average credit period of 50 days)?

a. 14.90%
b. 15.89%
c. 14.6%
d. 15.55%

8. A commercial bill with a face value of $100000 has a current price of $97711. This bill
has 95 days to maturity which necessarily implies that its yield is:

a. 8%
b. 9%
c. 10%
d. 11%.

3
9. A project has an NPV of $220000 and a PVFA of 1.7355. The equivalent annual annuity
for this project is:

a. $134500
b. $132456
c. $126764
d. $381 810

10. A project has an initial cash outlay of $1 000 000 and generates cash inflows of
$100000 in each year in perpetuity starting one year from now. The payback period for
this project is:

a. 5 years
b. 20 years
c. 100 years
d. 10 years.

11. A project is forecasted to produce net profits of $20 000, $25 000, $27 000 and $30 000
in year's one, two, three and four, respectively. The project requires the purchase of a
machine that costs $100 000 that will be depreciated to zero, using straight line
depreciation, in four years. The ARR of this project is:

a. 50%
b. 51%
c. 52%
d. 53%.

12. A project is expected to produce net profits of $5000 next year and $10 000 the
following year. An asset must be purchased and will be depreciated over the next two
years with zero salvage value. The expected ARR on this project is 12.5%. This
necessarily implies an asset cost of:

a. $100000
b. $110000
c. $120000
d. $130000.

13. If demand for chocolate bars is 5000 per year and ordering and holding costs are $1.25
and $1. 75 respectively, then the economic order quantity (EOQ) is:

a. 95
b. 85
c. 118
d. 93.
4
14. If demand for cars is 1300 per year and ordering and holding costs are $3000 and $4000
respectively, assuming a constant rate of demand this order would last:

a. 161 days
b. 12 days
c. 29 days
d. 83 days.

15. Which of the following is not encompassed within the just-in-time (lIT) philosophy?

a. Reduction in setup times

b. Zero defects
c. Multi-skilled workers
d. Larger inventories.

16. Given an economic order quantity (EOQ) of 120, demand of 100 000 units and holding
costs of $7, this implies ordering costs of approximately:

a. $12
b. $18
c. $7
d. $5

17. A company's shares are trading at $14 when it decides to make a 2-for-II rights issue at
an issue price of $1 0.80. The theoretical price of a right is:

a. $3.20
b. $2.71
c. $3.78
d. $13.51

18. Given a current market price of $7.20, a subscription price of $5.50 and a theoretical
rights price of $1.36, this implies a:

a. 1-for-7 rights issue

b. 2-for-9 rights issue
c. 1-for-4 rights issue
d. I-for-3 rights issue.

5
19. Greenridge Nursery has just contracted to supply eucalypt seedlings in tubes to five
mining companies for their landscape rehabilitation work after open-cut mining. The
contracts are for the supply of 20 000 tubes monthly for the next 3 years. Greenridge
needs to upgrade its propagation house, induding the hotbeds and watering system, and
to increase the size of its growing out area and its automatic watering system. The
expansion works will cost $100 000. Greenridge is offered lease finance for $100 000
over 2 years or 3 years, with lease payments due semi-annually, starting immediately. The
lease finance is available at 9.00% pa. What is the amount of each lease payment with the
3-year option with no residual?

a. $18,552.95
b. $16,239.37
c. $29,318.23
d. None of the above

20. Jupiter Gold Explorers Ltd is a geological exploration business in Western Australia.
Jupiter has just made a rights issue at the rate of 1:5 and there were 10 million shares
outstanding before the rights issue. The subscription price for the rights shares was $2.50
and the theoretical ex-rights price was $3.25. What was the market price before the rights
issue?

a. $2.50
b. $3.40
c. $5.75
d. None of the above

21. If the after-tax cash inflow from selling shares after their ex-dividend date is equal to the
after-tax cash outflow when buying the same shares before their ex-dividend date, an
investor is unable to make which of the following types of profit?

a. speculative
b. capital gain
c. arbitrage
d. cumulative.

22. Given earnings per share of $4 and a dividend payout ratio of 0.25, this implies
dividends per share of:

a. $1
b. $10
c. $2
d. $20

6
23. Given a growth rate of 10% and a retention ratio of30%, the return on equity is:

a. 20%
b. 50%
c. 300%
d. 33%

24. Given earnings of $100,000 and number of shares outstanding prior to and after a
buyback of 1,000,000 and 900,000 respectively, this implies an EPS of before buyback
of:

a. $1
b. $1.11
c. $0.90
d. None ofthe above

25. Given a current market price of $4 and dividends of $0.30, the dividend yield is:

a. 15%
b.7%
c.23%
d. None of the above

26. Which of the following statements IS not an assumption underlying the dividend
irrelevance theory?

a. investment decisions of a company are dependent on its dividend policy

b. no business or personal taxes
c. no transaction costs relating to the purchase or sale of shares
d. complete and costless infonnation about companies is available to investors.

27. If the certainty equivalent was found for the expected net cash flow for each year of the
project, then to calculate NPV we would discount the certainty equivalents using the:

a. weighted average cost of capital

b. risk adjusted discount rate
c. risk-free rate
d. internal rate of return.

7
28. Which ofthe following statements about risk adjusted discount rates is true?

a. Risk adjusted discount rates incorporate differing levels of risk into a project by
changing the required return or discount rate.
b. Risk adjusted discount rates increases the hurdle rate for less risky projects
c. Both a and b are true
d. None of the above

29. Which of the following is not an assumption underlying economic order quantity (EOQ)
theory?

a. Demand is known
b. Demand is constant
c. Delivery is lagged
d. Ordering costs are known.

30. AON is a South Australian biotechnology company that develops vaccines. It needs to
raise $20 million to fund new research. It has 10 million ordinary shares on issue, and
these are currently selling on the ASX for $13.20. The directors decide to make a 1-for-5
rights issue at $10 subscription. What is the theoretical price of a right?

a. $12.67
b. $10
c. $13.20
d. $2.67

8
Section B: (70 marks)

Question 1: (25 marks)

TakiMai Studios is a company registered in Fiji. As the CFO of TakiMai Studios, you have to
detennine which projects the company should make. The investment alternatives are listed
below:

Investment Initial Outlay ($) IRR before tax (%) IRR after tax (%)

Ku1aFiz 121,000 8 7

Bu1a Breeze 60,000 9 8

EcoPark 800,000 12 10

CaptainCruz 415,000 17 14.5

Va1ueBoom 65,000 15 13.5

The current Capital Structure is as follows:

Source of Finance Amount of Finance ($)

Long tenn debts 875,000

Preference shares 650,000

Ordinary shares (including retained earnings) 950,000

The Board has specified this pattern of funding as the target capital mix. To raise additional
debt, TakiMai Studios would issue bonds with a face value of$I,OOO. The coupon rate on the
bonds would be 5% and interest would be paid annually. The bonds would mature in ten
years' time. Issue costs are 2.5 per cent of the face value. (Use the approximate cost of debt
equation to calculate the cost of debt).

A new offering of preference shares would have issue costs of 4.5%. The preference shares
are trading at $5.5.0 and new shares would be issued at this price. TakiMai Studios pays fully
franked dividends of 35 cents per share.

The ordinary shares have a market price of$5.50. The next dividend (35 cents, fully franked)
will be paid at the end of the year. Dividends are expected to grow at an annual rate of 6 per
cent thereafter. Flotation costs for ordinary shares would be 5.5% of the issue proceeds of
$5.20 per share. However, TakiMai Studios has sufficient cash to fund the equity portion for

9
all of the proposed projects. Therefore, no new issue of ordinary shares is to occur. The
corporate tax rate is 32%.

Workings are to be kept to four decimal places and final answer to two decimal places.

Required:

1. Calculate the cost of capital if TakiMai' s shareholders are resident shareholders.

Recommend which projects should be accepted. (10 marks)

2. Calculate the cost of capital if TakiMai's shareholders are foreign shareholders.

Recommend which projects should be accepted. (10 marks)

3. Would your recommendation change if TakiMai Studios did not have any cash that
would be used to fund the equity portion of the proposed projects? Calculate the after-
tax cost of capital to demonstrate. (5 marks)

Show All Relevant Working.

(Total marks: 25 marks)

Question 2: (25 marks)

Part A: (15 marks)

Pacific Link Limited has authorised 2.5 million authorised shares and with 2 million ordinary
shares outstanding and a price-earnings multiple of 35. The firm's annual earnings is
$800 000. It is considering a 20% bonus share issue to supplement its current low cash
dividend policy.

Required:

1. What is the firm's current share price? How will it be affected by the proposed bonus
share issue? (5 marks)

2. Suppose you hold 200 Bell shares. What will be the impact of a bonus issue on the
total value of your shares? (5 marks)

3. What are the indicators of dividend policy? Define each indicator. (5 marks)

Show All Relevant Working.

Part B: (10 marks)

A high dividend payment could decrease share price, increase it or make no difference.
Explain, in detail, these three basic views on dividend policy.

(Total marks: 25 marks)

10
Question 3 (20 marks)

Kanye West & Sons is a family owned partnership that is an Internet Service Provider
(ISP).It is considering the installation of an advanced server. Because of the prospects of
advancements in the computer technology, it is evaluating the acquisition by either
purchasing it, or leasing it under a contract that includes a cancellation option. Infonnation
relevant to the company's two options is as follows:

Purchase

The purchase price of the server is $280,000, and the company will pay installation and set-
up charges of $20,000 to the vendor. The partnership depreciates the asset using diminishing
value method of 25%. The Tax Authority depreciates the same asset at a rate of 20 per cent
per annum on prime cost basis. The server's disposal value at the end of 5 years is estimated
to be $45,000. Kanye West & Sons will have to enter into a maintenance contract to service
the server at an annual cost of $7,000 payable at the end of each year.

Lease

There will be 5 mIDual lease payments on the operating lease of $80,000, payable at the
beginning of each year. The lease can be cancelled by Kanye West & Sons at any time
without attracting any penalty. Under the operating lease, the lessor will bear the cost of
servicing the server.

The partners all have a marginal tax rate of 47 percent. The corporate tax rate is 30 percent.
The required rate of return on the investment is 20 percent per annum. If purchased, Kanye
West & Sons will finance the acquisition of the server with a loan at a before-tax interest rate
of 10 percent per annum.

Should the partnership purchase or lease the server? Show all calculations and the cash flow
time lines for both the options. (Round off all figures to the nearest dollar).

(Total marks: 20 marks)

THE END

11
 Formulae

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_ .fR,
R=f:C:
T
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. . B(R) "'" ~+ II (B(R.).- 11ft

~A :C{(~+Jlr -1}
WAD _ C{' [.t - (l ... .t~]
+1}
.t
.w..- (1+"11>"
n F. . . . ..
..

ylI-f, C1 + 1!
. ~ (1 + l'r;t ,(~. -+ rot)'"

D
Vp=-
"pc
o

12
 1+ (F-JiP~
ka~& =-'~--~~~~
....... (F+NIic)
2,

~ ~
....
># P1PA~_

D ARR "'" av-ei"ftg! net profit

average. iny_tm~nt

~~llIt~.
•.
"'" DPS
BP&
'~ml'II!",(1-~~1i'fi~_~
~. .

n-l

R
l~~C """ ~.~1 V....
*=1

Ft.,P: NCfirY":f~S).
N-r('

13
14
Table Z

.'.."."""'.,,. .",' . 1
I'rc.on' vallie of $1 receive" at the en" of /I periods = - - -
(I + k)"

DiSCQ""' r,,\O Olsco"nt rate "

,.~;~'~ . 1% 8% 9't9 ii~ ~;'·Ti4;'·TiS%-:-·i6~-,7i~i-lai~;.--r-·20% .,
'0.990 1 Q. 98 04 .0.Jl7D9 '.0.. 9615' 0·9;;24 D.~434 0..9346 . 0.92.59 0.9174 . ,q;~b91 ·:!P:·~·61qW~tl~:~;6Ti}~~~~:~J~f9·:!r~~!f:;·;:~::·~6.~i·~~7;J/.~j~~g;rfF(;;a$~;~~!·5~~~~~~~~~··i~i~~~~~~;~~~;r!?)E~~1.l~~~~~~~~~~~~~11
0.9803 0.9612 0..9426 0..9246 0..9070 0.890.0. 0.81.34 0.8573 0.8417 '0.8264 0..8116 0.7972 0..7831 0.7695 0.7561 0.7432 0.730.5 0.7182 0.70.62 0.6944

0.91.06 .0.9423. ·p.9151 0.8890. ·.o..?.638 0..83.96 0..81.63 .-Q.7g}8 . .0.73j2 0.7if8 '0..6931 . 0.6750 ' 0)jS7~ .:~~·~d~. '<d144 ' o,6cili~ . O.'593'I:O:~?iii;._,"-_~..:.i
0.9610 0..9238 D.BBB5 0.8548 0.8227 0..7921 0..7629 0..7350 0.7084 0.6830 0.6587 0..6355 0..6133 0..5921 0.5718 0.5523 0.5337 0.5158 0..4987 0.4823

0 ..9.5!5 0..90.57 D.B62Jl 0..8219 '. 0.7835 9·7473 , 0.7130.· 9,68 96 .0.6499 O;6~09 ·O.59~5 0.. 5674 6.54iS '0,5194 '0.4'972 0..476'1 O.456i O.43ii 0.4i90 . O\O;~'5
..., .. , ... ~ .. __ .·.... _. __ ~.L.

0.9420 0.8880 0..B375 0..790.3 0.7462 0.70.50. 0..6663 q.63D2 0..5963 0..5645 0.5346 0.5066 0..'1803 0.4556 0.4323 0.1104 0.3898 0.370.4 0.3521 0.3349
. . 1". --
0.9327 0.8706 0.B131 0..7599 ·.0.7101. 0..6651 0.6227 ' 0.5835 0.5470. 0,5132 0.4817 ''0.4523 , 0.4251 0.3996 0.3759 0.3538 0..3332 0,:fi39 '0.. 2~59
.:.,,_i
0.9235 0.B535 0..7894 0..7307 0..6768 0.62711 0..5B2D 0..5403 0.50.19 0.4665 0,4339 0.4039 0.3762 0.350.6 0..3269 0.3050 0..2848 0.2660 0.2487 0..2326
,-.
0.9143.. 0..8368 0. ..7664 0..70.26 0..64116 0.5919 0..5439 . 0..50.02 0. ..460.4 .0.424.1 0.3'909 0..360.6 0.3329 0..3075'0.;2843 0.2630 '0.. 2434 0..2255 '0.2090 '0:1938 ..··9
.._ ...-i-.._l
10 0.9053 0..820.3 0..7441 0..6756 0..6139 0.5584 0.5083 0..4632 0.4224 0.3855 0.3522 0.3220 0.2946 0.2697 0.2472 0.2267 0.2080 0..1911 0..1756 0.1615 10
. '-" .-.~ .• "-~-"1

11 , p.?963 0,8043 0.,4751' . D~~~75 0·350.5 .; . 0,2475 '0.:2149 0:1954 "0..1778 ·D.161~ 0~i4i~
. 0.,72 24 0..6196 0..5847 . 0..5268 0..4289
_ ••' •• " •• ·1
0,3173 0.2667. 0.2366
. . .._ ---.. :- ... -.~-.-.-.:. .
12 0..8874 0..7885 0..70.14 0..6246 0.5568 0.4970 0..1440. 0.3971 0.3555 0..3186 0.2858 0.2567 0..230.7 0.2076 0.1869 0.1685 0..1520 0.1372 0.1240 0.1122 12

013 D.~787 0..7730. '0..68.10 .. 0..90.06 0..530.3 0.4~88 '0.4150. O..36U 0.3202 ...D.~8W" 0:257'; D.. 22~2 0.204~ 0:1821 0.16250:1452 0.1299 0.116'3; 0,11)42' 0:0935' 13!
14 0..81.0.0. 0..7579 0..6611 0..3878 0.3405 0.2992 0..2633 0.1252 0.1110 0.0985 0.0876 0.0779 14
_... _-_._--_.0.50.51
O.S77~ 0.4423
._ ... -.,_.. _._ ... -.,-.-.
0.2320 0..2046 0.1807 0.159/ 0.1413

1.5 '0..8613 0..7439 0,641.9 0.5553 0.1810 0.'1173 .0.3624 0;3152 O.2·7:l5 ·~~·~.~¥:::~. l 0.2090 0.1827 0.1599 'O:i40i 0.li290.lOf9 0;0.949 0.0835 0.073.6 0:0649 ' . ,LS, ,
16 0..8528 0.7284 0.6232 0.5339 0.1581 0.3936 0.3387 0..2919 0..2519 0.2176 0.1883 0.1631 0..1415 0.1229 0..1069 0.0930 0.0811 0.070B 0.0.618 0.0541 16

1·7 0..844 4 . 0'71.4~ 0..6050 :0§.134 ·0..43.63 0..37·14· 0..3166 0.2-70..3 ··-O.2311-~.':~.I:~~Ll '0.'1696 001456 0.m2 0.'1078 d.O~29 . 0.0802 0.0693 n:oC;?O
0.0.600 ............ ,.' ...... ' :.,~ ..;, .... __.:....._c,
D.04Si 17

IS 0..8360 0.7002 0.5874 0.4936 004155 0.3503 0.2959 0.250.2 0.2120 0.1799 0.1528 0.1300 0.110.8 0.0946 0.0808 0.0691 0..0592 0.0.508 0.0.437 0.0376 18

19 D.8?77 0,6864· 0..5703 '0,474.6 0.3957 0.3305 0.2765 0.231'1 ..0.1945. ··.I:;:~~iJ '0.1377 0:1161 0..098'1 0.0829 o.ii763 0.05[i6 0.0.5.06 0.0431 0.0367 0.0'313 19
..!::.::: ....:.....:-.:.....--.. :
20. 0.8195 0.6730 0..5537 0.4564 0..3769 0.3118 0.2584 0..2145 0.1784 0.1486 0.1240. 0..1037 0.0868 0..0728 0..0611 0.0.514 0.0433 0.0.365 0.0308 0..0261 20.

l5 0...7798. 0.6095 0.4776 0;3751 0.2953 . 0.;2330 0.1842 0.. 146 9 O.H6.93~~E1 0.0736 0.0588 0...0471 0..0378 0.0.304 0..02.45 0.0'197 0.0160 Ii.Qi.29 0.1i.105 25
30 0..7419 0.5521 0,4120 0.3083 0.2314 0.1741 0.1314 0.0994 0.0754 0,0.573 0.0437 0.0334 0.0256 0.0196 0.0151 0.01l6 0.0090 0.0070 0.00.54 0.00.42 30
35 '0..7059 '0.5000. 0.~554 0.2534 0.1813 ·.. ·0..1301 0.0.937 '0..0676' O:·~1:~~?~.·~~.-~·:~~?~~JJf~ 0..0259 0;0!89 .0.0139 '0.0102 0..0075 0.0055 0.0.0.41' 0.0030 0.0.023
... -_._ .._. __..
0.00.17
..---~.- .... -.-.----.
35
40 0..61.17 0..4529 0.3066 0..20.83 0.1420. 0.0.972 0..0668 0.0460. 0..0318 0.0221 0.0154 0.0107 0..0075 0.0.0.53 0.0037 0..0.026 0.0019 0.0013 0.0.010 0.0007 40
0,0313-···0~020~·~~~m
.- ·1
45 o..6~91 0.410.2 '0.2644 o.!m 0.1lI~ 0.0.727. . R·0,476 0.0091 0;0.06'1 0.0041' 0.00.27 0.00.19 0.0013 '0;0.009 "0.:0006 0.0..004 0.600.3 45
50. 0.6080. 0.3715 0.2281 0.1407 0.0872 0.0.543 0..0339 0.0213 0.0134 0.00.85 0..0054 0.0.035 0.0.022 0.0.014 0..0.009 0.00.06 0..000.4 0.0.0.03 0.0.00.2 0.000.1 50

736 Appendix I The time value of money Appendix) The time value of money 737
Tabl"! 4
In this table it is assumed that the payments are rece.ived at the end or each period.

0.9901 '0"9804 : 0.9709. '. '0.9615 0.9.524 '0'.9434 '0:9346 0.9259 '.' 0'9174 d,9091'
1.9704 1.9416 1.9135 1.8861 1_859'1 1.8334 1.8080 1.7833 1.7591 1.7355 1.7125 1.6901 1.6G81 1.6467 1.6257 1.6052 1.5852 1.5656 1.5465 1.5278 . 2
2,9410

3.9020
2.8839

3.8077
2.8286

3.t171
'2.7751

3.6299
2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4437 2.4018 :2.3612. 2.3216 2.2832 J}1S.9 2.2096 2.1'743 '2..1399
~;:~~~~~l67tll~
3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.1024 3.0373 2.9745 2.9137 2.8550 2.7982 2.7432 2.6901 2.6386 2.5887 • 4
4.8534 4.7135 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.B897. 3.7908 3.6959 3.6048 3.5.172 3.4331 3.~522 3.2743- .3-".993 ",1272 3..0.576 :~~-~.~~il~21~~
5.7955 5.6014 5.4172 5.2421 5.0757 4.9173 4./665 4.6229 4.4859 4.3553 4.2305 4.1Il4 3.997'; 3.8887 3.7845 3.6847 3.5892 3.4976 3.4098 3.3255 6

.L~2~~~:=~J
6.7282 6.1720 6.2303 .6.0021 5.7864 5.5824 . 5.3893 5.2064 5.0330 4.8684 4.7122 4.S638 4.4226 4.2883 4.1604 4.0386 3.9224 3.:8115 3.7057
7.6517 7.3255 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 5.1461 4.9676 4.7988 4.6389 4.4873 4.3436 4.2072 4.0776 3.9544 3.8372 8
8.5660 8.1622 7.7861 7:4353 7.1078 6.8017 6.5152 . 6.2469 5.9952 5;7590 ?5370 ~.3282 5..131.7 4·946'1 .4:7716' .4.[,065 4'.45'06 .. 4.3636 4.)'6.e3 4.<i3.iO
10 9.4713 8.9826 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.8892 S.6502 5.4262 5.2161 5.0188 4.8332 4.6586 4.4941 4.3389 4.1925 10
II 10.3676 9.781l8 9.2526 8.76·OS S.4~~7
8.3064 7.8869 7.4987 7.1390 6.8052 .. 6.4951' ·~ ..2065 5:9377 5.6869 . 5.2337 5.0286 4:8~64 A'6560 '4.~86'
12 I r.2551 10.5753 9.9540 9.3851 8.8633 8.3838 7.9'127 7.5361 7.1607 6.8137 6.4924 6.1944 5.9176 5.6603 5.4206 5.1971 4.9884 4.7932 4.610.5 4.4392 12
13 12.1337 11.3484 ·10.6350 9.9856 9.3936' 8:8527 8.3577 7.9038 7.4869 7.103~ 6.7499 6.4235 6.1218 5.84i4 5.?8~1 -5.3.423 ,.1183 ~,9.o.95 4.-7147 4.s:tn·
14 13.0037 12.1062 11.2961 10.5631 9.8986 9.2950 8.7455 8.2442 7.7862 7.3667 6.9819 6.6282 6.3025 6.0021 5.7245 5.4675 5.2293 5.0081 4.8023 4.6106 14
15 13.8651 12.8493 n.9379 I Lll84 10.3797 !l'.7122 9.1079 8.5595 B.0607 7606r 7.1909 ·6.8109 6.4624 6.14225.8474 5.5755 '5.. 3242 5.0<ii6 4:875~".1;ft5E~H_.1,5_·~
16 14.7179 13.5777 12.5611 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 7.8237 7.3792 6.9740 6.6039 6.2651 5.9542 5.6685 5.4053 5.1624 4.9377 4.7296 16
......,...... ---.M-·.. ~l

i7 15.5623 14.29'19 13;1061 12.1657 11.2741 10,4773 9.7632 9.1216 8.5436 8:0216'
.. " )
7.5488 7.i196 6.7291 6.3729
.,
6.0472
.. ... ".-._" ...
~ "
5.7487 . 5.:~746 5.2'223 .4.9897. .
. ,·.~E~~::.. :~fJ
18 16.3983 14.9920 13.7535 12.6593 11.6896 10.8276 10.0591 9.3719 8.7556 7.7016 7.2497 6.8399 6.4674 6.1280 5.8178 5.5339 5.2732 5.0333 4.8122 18
B.2014
19 17.2260 15.6785 14.3238 13.1339 12.0853 11.15Bl 10_"3356 9.6036 8.9501 8.• 3649 7·8393 7.365.8 6.9380 6.5504 6.1982 5:8}7:5 5.~~~S. . s.li 62 "'" ::.0!p:?:~.._4:~~3~~:;Gl~j
20 18.0456 16.3514 14.8775 13.5903 12.4622 11.4699 10.5940 9.8181 9.1285 8.5136 7.9633 7.4694 7.0248 6.6231 5.6278 5.3527 5.1009 4.8696 20.
6.2593 5.9288
25 22.0232 19.5235 17.4131 ·15.622l' 14.0939 12.7834 11.6536 10.6748 9.8226?:0:7§:i 8.4217 7;843i 7.3300 6.8729 '6~4641 ,.·6,0971 5.7662 ?:6~~ __ .. :5:!9:~,.,. ~4,:~~:;~i:2~~~::J
30 25.8077 22.3965 19.6004 17.2920 15.3725 13.7648 12.4090 11.2578 8.6938
10.2737 9.4269 8.0552 7.4957 7.0027 65660 6.1772 5.8294 5.516S 5.2347 4.9789 ~O

35 29.4086 24.9986 21.4Sn 18.6646 16.3742 14.4982 12.9477 11.;;546 10.51';68 9:6-44~'~i 8.8552 8.1755 7.5S·56 7.0'70'0 6·6166 6.2153 5.8582 5.~366 5.. 2512'~::?:~~,;·jd38]
40 32.8'347 27.3555 23.1148 19.7928 17.1591 15.0463 13.3317 11.9246 10.7574 8.9511
9.7791 8.2438 7.6344 7.1050 6.64l8 6.2335 5.8713 5.5482 5.2582 4.9966 ·10
'15 36.0945 29.. 4902 24.5187 20.7200 17.7741 15.4558 13.6055 12.1084 10.8812~9"8~;~C!
•• J
9.0079 8.2825 7.6609 7.1232 6.6543 6.2421 5.8773 5.5523 5.2611
4:9Qa;;-:-:;s-',
50 39.1961 31.4236 25.7298 21.4822 18.2559 15.7619 13.8007 12.2335 10.9617 9.9148' 9.0417 8.3045 7.6752 7.1327 6.6605 6.2463 5.8801 5.5541 5.2623 4.9995 50

740 Appendix I The tim!! value of money

Appendix I The time value or money 741
<
,
'.

AF 208 FINAL EXAMINATION SEMESTER 2,2015

Student Name:
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Student ID:
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SECTION A MULTIPLE CHOICE QUESTIONS 30 Marks

1. a b c d 16. a b c d
2. a b c d 17. a b c d
3. a b c d 18. a b c d
4. a b c d 19. a b c d
5. a b c d 20. a b c d
6. a b c d 21. a b c d
7. a b c d 22. a b c d
8. a b c d 23. a b c d
9. a b c d 24. a b c d
10. a b c d 25. a b c d
11. a b c d 26. a b c d
12. a b c d 27. a b c d
13. a b c d 28. a b c d
14. a b c d 29. a b c d
15. a b c d 30. a b c d