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(a) What is the simple interest on P60,000 for six months at a simple interest of 12%


(b) What is the compound interest if the same investment is compounded quarterly? (c)


Obtain the difference.


Project costs Rs 180,000 and is expected to generate cash inflows as:


Year Cash Inflow ( Rs )

1 20000

2 24000

3 30000

4 36000

5 40000


a. Discuss the characteristics of long term capital budgeting decisions

b. calculate the Net Present Value of the project if the cost of capital is 12% and conclude.


For a business firm leverage is about the fixed operating cost and the fixed finance costs in the cost structure of the firm. For the given details, identify for which firm the degree of operating leverage and degree of financial leverage are higher and why so:


Firms Amrit Baayu

Sales (Rs.) 360000 750000

Variable cost p.u 20 150

Fixed cost (Rs.) 72000 140000

Output (units) 6000 1500

Interest 40000 80000


Dr. Grey would like to place her savings into two different investments; moonlife financial at 7% and womanulife financial at 12% interest rates per annum. She invested part of her savings on both companies and found out that she still has php 125,000.00 left in her savings. When she calculated the expected interest at the end of the year, the total interest from both investment would only be php 7,500.00. Hence, she decided to double her original investment in womanulife and was left with only Php 5.000.00 in her savings. How much was her total savings and how much did she originally invested in both companies?


What js the present value of a $100 perpetuity if the interest rate is 7%? If interest rates doubled to 14%, what would its present value be?


A client approaches you with the news that she plans to retire on a ranch worth R3000000. She plans to save every year for 20 years. How much must she save at the end of each year if the interest rate is 12% per annum? (Round off the answer to the nearest rand.).




Lemmon has EAT, depreciation expense, capital expenses, debt and debt principal payments of $9m, $2.8m, $40m and $1.5m respectively. Between the first and the second years, it has current assets of $11m and $13.4m and current debts of $5m and $6.1m respectively. its unlevered beta, D/E and t are 3, 40/60 and .4 respectively. The t bond rate is at 2% and the risk premium is 8%and its sales are $90m. Derive the value of lemon

A loan is granted at 21,6 % p.a. compounded daily. It is repaid by means of regular, equal payments of R1500 made every four months, where the first payment is made one year after the loan is granted. If the last payment is made exactly five years after the loan is granted, then the value of the loan, to the nearest cent, is R


The treasurer of Company ABC expects to receive a cash inflow of $18,000,000 in 90 days. The treasurer expects short-term interest rates to fall during the next 90 days. To hedge against this risk, the treasurer decides to use an FRA that expires in 90 days and is based on 90-day LIBOR. The FRA is quoted at 6%. At expiration, LIBOR is 4.8%. Assume that the notional principal on the contract is $18,000,000.


 Calculate the gain or loss to Company ABC as a consequence of entering the FRA



find the intetest rate if $5000 is borrowed and $5243.75 is paid back 9 months later

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