a) According to the flow of balance of payment (BOP) approach to exchange rate determination, there are financial measures being put in place by countries with managed floating exchange rate regime in order to cope with a deficit in its BOP. In order to control those countries currency volatility and opt for stabilisation what will happen if they run persistent BOP deficits for a couple of years? (5 Marks) b) Suppose that we have $100.000 as the principal amount and the prevailing interest rate is 10% yearly for a certain project. How would you be able to determine the accumulated principal with compound interest? (5 Marks) c) There is a financial project that pays $500.000 3 years from now. If the market interest rate is 7% per annum and the price of the project is $400.000; then is it profitable or not to invest in that project? (5 Marks) d) Right man Investment Ltd., procured an equipment that costs $15,000 and generates a $5,000 annual return and would appear to "pay back" on the investment in 3 years. If economists expect inflation to rise 30 percent annually, what will be the estimated retum value at the end of the first year for the organisation? (5 Marks) e) Vodafone, like many emerging telecom carriers, has only limited and infrequent access to domestic debt and equity markets. As a financial management of Ait, how would you be able to demonstrate to the Board of Directors and convince them as to why the Net Present Value and Internal Rate of Return capital budgeting decision rules sometimes provide different rank orderings of investment project alternatives?. (5 Marks) a) According to the flow of balance of payment (BOP) approach to exchange rate determination, there are financial measures being put in place by countries with managed floating exchange rate regime in order to cope with a deficit in its BOP. In order to control those countries currency volatility and opt for stabilisation what will happen if they run persistent BOP deficits for a couple of years? (5 Marks) b) Suppose that we have $100.000 as the principal amount and the prevailing interest rate is 10% yearly for a certain project. How would you be able to determine the accumulated principal with compound interest? (5 Marks) c) There is a financial project that pays $500.000 3 years from now. If the market interest rate is 7% per annum and the price of the project is $400.000; then is it profitable or not to invest in that project? (5 Marks) d) Right man Investment Ltd., procured an equipment that costs $15,000 and generates a $5,000 annual return and would appear to "pay back" on the investment in 3 years. If economists expect inflation to rise 30 percent annually, what will be the estimated retum value at the end of the first year for the organisation? (5 Marks) e) Vodafone, like many emerging telecom carriers, has only limited and infrequent access to domestic debt and equity markets. As a financial management of Ait, how would you be able to demonstrate to the Board of Directors and convince them as to why the Net Present Value and Internal Rate of Return capital budgeting decision rules sometimes provide different rank orderings of investment project alternatives
