(a)Calculate the value of a 3-year bond with face value of Kes. 1,200 and coupon rate being 8% paid annually. Assume that the discount rate is 10%.(2 marks)

(b)(b) The balance sheet of Githurai Ltd is given below for your consideration.

Liabilities and Capital (Kes Millions) Assets (Kes Millions)

Capital & reserves 355 Net fixed assets 265

P&L credit balance 7 Cash at Bank 1

Long term loan from Barclays bank 100 Receivables 125

Bank Overdraft 38 Inventory 128

Creditors 26 Prepaid expenses 1 Provision for tax 9 Intangible assets 30

Proposed dividend 15

550 550

The net profit after tax for the same period was Kes 40 Million

Required:

Based on the information above, compute the following ratios;

(i)Current Ratio and Quick Ratio(2 mark)

(ii)Debt/Equity Ratio(2 marks)

(iii)Return on Assets(2 marks)

(iv)Comment on the leverage and profitability of Githurai co Ltd based on the ratios computed in (ii) and (iii) above (2 marks)