Business Article   : World Economic Forum

Even years ago, the Harvard Business Review pointed out that Africa is also home to many of the world’s biggest opportunities. And yet, despite its tremendous business potential, Africa has not risen to the top of Western business leaders’ agendas.

In fact, between 2014 and 2016, US exports to Africa fell by almost half, from $38 billion to $22 billion. And while the United Kingdom’s investments on the continent more than doubled between 2005 and 2014, reaching £42.5 billion ($57.6 billion), only 2.5% of its total exports are to Africa.

Western countries are quickly losing ground to China, which increased its exports to Africa more than sevenfold – to $103 billion – from 2005 to 2015. If Western businesses hope to keep up, they will need to tap into the African countries and sectors with the highest potential for growth.

By 2030, more than half of Africa’s population will reside in seven countries: Nigeria, Ethiopia, the Democratic Republic of Congo, Egypt, Tanzania, Kenya, and South Africa. But, more important, 43% of Africans will belong to the middle or upper classes, up from 39.6% in 2013, implying considerably higher demand for goods and services. By 2030, household consumption is expected to reach $2.5 trillion, up from $1.1 trillion in 2015.

Nearly half of that $2.5 trillion will be spent in three countries: Nigeria (20%), Egypt (17%), and South Africa (11%). But there will also be lucrative opportunities in Algeria, Angola, Ethiopia, Ghana, Kenya, Morocco, Sudan, and Tunisia. Any one of these countries would be a good bet for companies seeking to enter new markets.

By 2030, the sectors generating the most value in Africa will be food and beverages ($740 billion), education and transportation ($397 billion), and housing ($390 billion). But there will also be strong growth in consumer goods ($370 billion), hospitality and recreation ($260 billion), health care ($175 billion), financial services ($85 billion), and telecommunications ($65 billion).

Of course, much of this growth will depend on the African Union properly implementing its new Continental Free Trade Area, which would create a single market for goods and services, offering corporations many points of entry. Moreover, the CFTA will increase the need for connectivity, so there will be new opportunities to invest in infrastructure and sectors ranging from transportation and energy to information and communications technology (ICT) and water supplies. For its part, the African Development Bank can help investors find promising projects through its Program for Infrastructure Development in Africa.

Another major growth area between now and 2030 will be in African business-to-business spending, which will reach $4.2 trillion, up from $1.6 trillion in 2015. Here, the largest sectors will be agriculture and agricultural processing ($915 billion), manufacturing ($666 billion), and construction, utilities, and transportation ($784 billion), followed by wholesale and retail ($665 billion), resources ($357 billion), banking and insurance ($249 billion), and telecommunications and ICT ($79.5 billion).

The expected growth in agriculture and agricultural processing reflects the fact that food and beverages will constitute the largest share of total household spending. Moreover, 60% of the world’s unused arable land is in Africa, which still contributes a meager share of worldwide agricultural exports. That means there is a lot of room for growth. And, because severe hunger still affects many African countries, investors can even contribute to the public good by investing in fertilizers, machinery, water and irrigation systems, and other areas of the agriculture sector.

As of 2012, the African countries with the highest agricultural value-added in terms of annual growth included Burkina Faso, Ethiopia, Nigeria, Mali, Mozambique, Rwanda, and Tanzania. In addition, Angola, Morocco, and South Africa now all have sizable markets, and have committed to expanding their agricultural sectors.

Part (1)

Required

After reading the above article by the world economic forum on aspects of investments in Africa and expected returns, the CEO of your company based on your expertise has asked you a few questions for your guidance

1. Pepsi Africa maintains a debt-equity ratio of 0.40 and follows a residual dividend policy. The company has after-tax earnings of $2,000 for the year and needs $1,600 for new investments. What is the total amount Pepsi Africa will pay out in dividends this year and what is your view on your calculation?                        [6 Marks]
2. Zambia choice Investments has recently purchased a stock that is expected to earn 15% in a booming economy, 10% in a normal economy and lose 7% in a recessionary economy. There is a 17% probability of a boom, a 72% chance of a normal economy, and an 11% chance of a recession. What is your expected rate of return on this stock?                                                                                  [8 Marks]
3. Shares in SAMSUNG Africa are currently selling for $5.5625. At the beginning of the year you bought them for $5.25 and during the year a dividend of 23.25 cents per share was paid. What is the return?                                                          [6 Marks]

Exercise 4-7 Write journal entries LO 6 The transactions relating to the formation of Blue Co. Stores, Inc., and its first month of operations follow. a. The firm was organized and the stockholders invested cash of $7,700. b. The firm borrowed $5,500 from the bank; a short-term note was signed. c. Display cases and other store equipment costing $1,800 were purchased for cash. The original list price of the equipment was $1,980, but a discount was received because the seller was having a sale. d. A store location was rented, and $1,450 was paid for the first month's rent. e. Inventory of $14,200 was purchased; $8,200 cash was paid to the suppliers, and the balance will be paid within 45 days. f. During the first week of operations, merchandise that had cost $4,900 was sold for $5,600 cash. g. A newspaper ad costing $110 was arranged for; it ran during the second week of the store's operations. The ad will be paid for in the next month. h. Additional inventory costing $4,400 was purchased; cash of $1,150 was paid, and the balance is due in 30 days. i. In the last three weeks of the first month, sales totaled $15,000, of which $9,800 was sold on account. The cost of the goods sold totaled $8,300. j. Employee wages for the month totaled $1,800; these will be paid during the first week of the next month. k. The firm collected a total of $3,200 from the sales on account recorded in transaction i. l. The firm paid a total of $4,750 of the amount owed to suppliers from transaction e. Required: Prepare the journal entries for each of these transactions.

According to the website www.collegedrinkingprevention.gov, “About 25 percent of college students report academic consequences of their drinking including missing class, falling behind, doing poorly on exams or papers, and receiving lower grades overall.” A statistics student is curious about drinking habits of students at his college. He wants to estimate the mean number of alcoholic drinks consumed each week by students at his college. He plans to use a 99% confidence interval. He surveys a random sample of 55 students. The sample mean is 3.69 alcoholic drinks per week. The sample standard deviation is 3.56 drinks.

Construct the 99% confidence interval to estimate the average number of alcoholic drinks consumed each week by students at this college.

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Your answer should be rounded to 2 decimal places.

Question 5

Estimating Mean SAT Math Score

The SAT is the most widely used college admission exam. (Most community colleges do not require students to take this exam.) The mean SAT math score varies by state and by year, so the value of µ depends on the state and the year. But let’s assume that the shape and spread of the distribution of individual SAT math scores in each state is the same each year. More specifically, assume that individual SAT math scores consistently have a normal distribution with a standard deviation of 100. An educational researcher wants to estimate the mean SAT math score (μ) for his state this year. The researcher chooses a random sample of 695 exams in his state. The sample mean for the test is 487.

Find the 90% confidence interval to estimate the mean SAT math score in this state for this year.

(Note: The critical z-value to use, zc, is: 1.645.)

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Your answer should be rounded to 3 decimal places.

Question 6

Is smoking during pregnancy associated with premature births? To investigate this question, researchers selected a random sample of 128 pregnant women who were smokers. The average pregnancy length for this sample of smokers was 257 days. From a large body of research, it is known that length of human pregnancy has a standard deviation of 16 days. The researchers assume that smoking does not affect the variability in pregnancy length.

Find the 95% confidence interval to estimate the length of pregnancy for women who smoke.

(Note: The critical z-value to use, zc, is: 1.960)

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Your answer should be rounded to 3 decimal places.

Psychology Only 10 questions.

1. In which disorder do people enter REM sleep more quickly than normal after falling asleep?

Answer Choices:

a.  paranoid schizophrenia

b. depression

c. social phobia

d. panic disorder

2. What evidence, if any, supports the idea that schizophrenia has a genetic basis?

a. studies of twins and adopted children

b. comparisons of schizophrenia prevalence in different culture

c. comparisons of the brains of people with and without schizophrenia

d. no evidence

3.  Which of the following disorders is most likely to be noticed during infancy or early childhood?

a.  paranoid schizophrenia

b. obsessive-compulsive disorder

c. autism

d. bipolar disorder

4. A compulsion is

a.  a repetitive action.

b.  an excessive fear.

c. an ailment with no medical basis.

d.  a repetitive line of thought.

5.  Studies that evaluate the effectiveness of psychotherapy generally find that

a.  people who receive no treatment are just as likely to improve as those who receive psychotherapy.

b. almost no psychologically disturbed people improve without the benefits of psychotherapy.

c. people are actually more likely to improve without psychotherapy than with it.

d.  the average psychotherapy patient improves more than do about 80% of the untreated people.

6. What is DSM?

a.  an association of university psychology departments

b.  a drug often used in the treatment of people with schizophrenia

c.  a book about diagnosing psychological disorders

d.  a standardized personality test

7. The psychological disorders that are diagnosed most frequently in the United States are

a.  substance abuse, mood disorders, impulse control problems and anxiety

b. depression, schizophrenia, and dissociative identity.

c. obsessive-compulsive disorder, substance abuse, and schizophrenia.

d. anxiety disorders, sexual disorders, and eating disorders.

8. What is the main goal of behavior therapy?

a.  to establish realistic goals and expectations

b.  to change behavior

c.  to bring unconscious thoughts into consciousness

d. to enable the client to achieve self-acceptance

9.  Which of the following are defining principles of community psychology?

a. Empowerment

b. Cultural diversity

c. Prevention

d. All of the above

10.  Which of the following have contributed to the development of community psychology in the U.S.?

a.  social politics of the 1960s

b. deinstitutionalization

c. community mental health

d. all of the above

Belle and the Beast want to retire in 10 years and can save $2,000 every three months. They plan to deposit the money at the beginning of each quarter into an account paying 4% compounded quarterly.

How much will Belle and the Beast have in 10 years?

In a Michelson interferometer, in order to shift the pattern by a half a fringe, one of the mirrors at the end of an arm must be moved by:

a. one wavelength

b. half a wavelength

c. one-quarter wavelength

d. it depends on the wavelength

e. it depends on which mirror is moved

Equal – quarterly deposits of P 2,000 for 2 years which starts immediately is made at a savings account that earns 4% compounded quarterly. What is the amount in the account when the last deposit is made? What is the amount in the account at the end of the last quarter?

1.  What is the amount of the noncash expenses for 2009?

A. $570

B. $630

C. $845

D. $1,370

E. $2,000

2. What is the change in the net working capital from 2008 to 2009?

A. $1,235

B. $1,035

C. $1,305

D. $1,335

E. $1535

3.  What is the operating cash flow for 2009?

A. $845

B. $1,930

C. $2,215

D. $2,845

E. $3,060

4. What is the amount of the net capital spending for 2009?

A. -$290

B. $795

C. $1,080

D. $1,660

E. $2,165

After spending $10,400 on​ client-development, you have just been offered a big production contract by a new client. The contract will add $193,000 to your revenues for each of the next five years and it will cost you $105,000 per year to make the additional product. You will have to use some existing equipment and buy new equipment as well. The existing equipment is fully​ depreciated, but could be sold for $48,000 now. If you use it in the​ project, it will be worthless at the end of the project. You will buy new equipment valued at $35,000 and use the​ 5-year MACRS schedule to depreciate it. It will be worthless at the end of the project. Your current production manager earns $75,000 per year. Since she is busy with ongoing​ projects, you are planning to hire an assistant at $38,000 per year to help with the expansion. You will have to immediately increase your inventory from $20,000 to $30,000.It will return to $20,000 at the end of the project. Your​ company's tax rate is 35% and your discount rate is 16%. What is the NPV of the​ contract? Note​:Assume that the equipment is put into use in year 1.

Calculate the free cash flows​ below:  ​(Round to the nearest​ dollar.)