1. Are the following capital budgeting or financing decisions? a) ZUDU Plc decides to spend K500 million to develop a new microprocessor. b) Volkswagen decides to raise 350 million euros through a bank loan. c) Indeni Plc constructs a pipeline to bring crude oil from Angola to Zambia. d) Zambeef sells shares to finance expansion of his newly formed securities trading firm. e) Aqualine Plc buys a license to produce and sell a new drug developed by a biotech company. f) Marka International issues new shares to help pay for the purchase of Kaka Ltd, a pharmaceutical distribution company. 2. Bond C has a K1,000 face value and provides an 8% annual coupon for 30 years. The appropriate discount rate is 10%. What is the value of the coupon bond? 3. State the reason each of the following may not be appropriate corporate goals: a. Increase market share b. Minimize costs c. Underprice any competitors d. Expand profits 4. Your rich father plans to give you a monetary gift by paying you K10,000 per year for 4 years, starting 1 year from now. What is the present value of your benefactors planned gifts? The interest rate is 7%. How much will you have 4 years from now if you invest each gift at 7%? 5. KHL Plc is financed by Ordinary shares (50ngwee par value) K1 million trading at K1.72 per share and 8% bonds K600, 000 with par value of K100 on which the interest is payable annually on 31 December. The debt is due for redemption at par in four years time. The market price of the bonds is K95. The market expected rate of return is 7%. KBM Ltd a company in the same industry as KHL has an expected return of 8% from its ordinary shares and have a beta of 1.2. KHL has a beta of 1.8. Calculate the cost of capital. 6. Explain the types of financial management decisions that a financial manager is expected to make. 7. a) Suppose Zambian manufacturing companies are able to reduce inventory levels to a year average value of K250 billion and average accounts receivable to K300 billion. By how many days will this reduce the cash conversion cycle? b) Suppose that with the same level of inventories, accounts receivable, and accounts payable, Zambian manufacturers can increase production and sales by 10%. What will be the effect on the cash conversion cycle? 8. Explain the objective of working capital management.