Assume a loan of $30,000, 36 months, 6.5% interest. Generate a table of payments showing the principal payment and the interest payment for each of the 36 months.

Suppose you have a portfolio that includes two stocks. You invested 60 percent of your total fund in a stock that has a Beta equal to 3.0 and the remaining 40 of your funds in a stock that has a Beta equal to 0.5. What is the Portfolio Beta?

1. a)            Stock F has a Beta Coefficient equal to 2. If the Risk-Free Rate of Return equals 4 per-

cent and the Expected Market Return equals 10 percent, what is stock F’s Required Rate of Return?

2.             A portfolio’s Expected Return is 12%, its Standard Deviation is 20%, and the Risk-Free Rate is 4%. Which of the following would make the greatest increase in the Portfolio’s Sharpe

                Ratio?

1. An increase of 1% in Expected Return.
2. A decrease of 1% in Risk-Free Rate
3. A decrease of 1% in its Standard Deviation

Consider two 5-year bonds: one has an 5% coupon rate and sells for $98; the other has an 8% coupon rate and sells for $109. What is the price of a 5-year zero coupon bond? (Assume that coupons are paid annually, and the face values of all the bonds are $100.)

(Keep your answer to 2 decimal places, e.g. xx.12.)

Consider the following three bonds:

Assume that coupons are paid every 6 months and the face values of all the bonds are $1,000.

(a) Suppose that the 0.5- and 1.5-year zero-coupon bonds are available. Determine their respective prices. (Keep 2 decimal places, e.g. xxx.12)

     P_Z0.5:               P_Z1.5:

(b) Determine the forward rate f _0.5,1 (in yearly term) on a 6-month Treasury bill 6 months from now. (Keep 4 decimal places, e.g. 0.1234)

(c) Determine the forward rate f_0.5,1.5 (in yearly term) on a 12-month Treasury bill 6 months from now. (Keep 4 decimal places, e.g. 0.1234)

(d) Price the 1.5-year coupon bond 6 months from now. (Keep 2 decimal places, e.g. xxx.12)?

8. Santos Limited has expanded its exploration program and has decided to fund the expansion through the issue of additional ordinary shares to its existing shareholders on a pro-rata basis of one new share for each 5 shares held. The issue price is $11.75 per share and the current market price is $11.95. The financial advisers to the corporation have recommended the use of an underwriting facility. The board of directors has noted that the underwriting facility has an outclause if the market price drops below $11.45. Having regard to this information, answer these questions. (a) What type of issue is Santos Limited making to its shareholders?

(b) What is an underwriting facility, and why might Santos use such a facility?

(c) Why might Santos use an underwriter?

4. Your Company is considering a new project that will require $24,000 of new equipment at the start of the project. The equipment will have a depreciable life of 7 years and will be depreciated to a book value of $1,600 using straight-line depreciation. The cost of capital is 10%, and the firm's tax rate is 34%. Estimate the present value of the tax benefits from depreciation.

• $1,088

• $5,297

• $2,112

• $3,200

7 (a) It may be argued that information is the life-blood of an efficient stock market. Explain this proposition.

(b) Within the context of the ASX, explain the requirements and purpose of continuous reporting.

(c) Identify, using examples, different pieces of information that are regarded as being material and therefore should be reported to the stock exchange.

7. Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 12 percent, and that the maximum allowable payback and discounted payback statistic for the project are 2 and 3 years, respectively.

Use the discounted payback decision rule to evaluate this project; should it be accepted or rejected?

• 3.22 years, reject

• 3.29 years, reject

• 2.78 years, accept

• 2.69 years, accept

9. Woolworths Limited is a publicly listed corporation. Its core business is in supermarkets. Woolworths has decided to set up a major hardware goods chain in competition with the Wesfarmers Limited-owned Bunnings stores. Woolworths needs to raise additional equity capital to fund the expansion. The company advisors recommend the board of directors choose between a pro-rata rights issue and a private placement. Explain each of these funding alternatives and discuss the advantages and disadvantages of each alternative.

Find an article and critique on a current article related to project risk management.

Instructions:

Source must be scholarly in nature:

Outline the issue

Why is the article / topic important?

What does this article mean to you?

Write 1 - 3 pages in APA format

This article critique should be in APA format grammar, spelling and quality will influence your grade. Kindly also attach the article that you decide to use as a source. No pictures and no handwritten materials please.

What are the internal and external factors that influence the pricing decisions? Please this is a marketing question

QUESTION 5

Dolby Enterprises has the option to invest in machinery in Projects M and N but finance is only available to invest in one of them.

1. Assume that all cash flows take place at the end of the year except the original investment in the project which takes place at the beginning of the project.

2. Project M machinery is expected to be disposed of at the end of year 5 with a scrap value of R60 000.

3. Project N machinery is expected to be disposed of at the end of year 5 with a nil scrap value.

4. Depreciation is calculated on a straight-line basis.

5. The discount rate to be used by the company is 12%.

5.1 Required:

Use the information provided above by Dolby Enterprises to answer the following questions:

5.1.1 Calculate the Payback Period of Project N. (Answer must be expressed in years and months.)

5.1.2 Calculate the Accounting Rate of Return (on average investment) of Project M.

(Answer must be expressed to two decimal places.)

5.1.3 Calculate the Net Present Value of each project. (Round off amounts to the nearest Rand.)

5.1.4 Using your answers from question 5.1.3, which project should be chosen? Why?

5.2 A machine with a purchase price of R418 000 is estimated to eliminate manual operations and save the company R130 000 cash per year. The machine will last 5 years and have no residual value at the end of its useful life.

Required:

Calculate the Internal Rate of Return (answer expressed to two decimal places).

6. Two derivative products that may be offered through a stock exchange are an options contract and a futures contract. Briefly explain the main features of each of these products. Why might an investor use these products?