QUESTION 1

1. A company is considering the purchase furniture at costing Rs 120,000 that would save

   Rs 30,000 each year for five years. The equipment could be sold at the end of its useful life for Rs 15,000. The

   company requires every project to yield a return of 10% or more otherwise they will be rejected. Should this equipment be purchased?

   a. Calculate the first NPV at 9%

QUESTION 2

1. A company is considering the purchase furniture at costing Rs 120,000 that would save

   Rs 30,000 each year for five years. The equipment could be sold at the end of its useful life for Rs 15,000. The

   company requires every project to yield a return of 10% or more otherwise they will be rejected. Should this equipment be purchased?

   b. Calculate the first NPV at 12%,

QUESTION 3

1. A company is considering the purchase furniture at costing Rs 120,000 that would save

   Rs 30,000 each year for five years. The equipment could be sold at the end of its useful life for Rs 15,000. The

   company requires every project to yield a return of 10% or more otherwise they will be rejected. Should this equipment be purchased?

   c. Use the two NPV values calculated in a and b part to estimate the IRR percentage (2 Mark)

QUESTION 4

1. A company is considering the purchase furniture at costing Rs 120,000 that would save

   Rs 30,000 each year for five years. The equipment could be sold at the end of its useful life for Rs 15,000. The

   company requires every project to yield a return of 10% or more otherwise they will be rejected. Should this equipment be purchased?

   d. With expected yield of 10% shall the project be undertaken. Comment (2 Mark)

2 points

QUESTION 5

1. a 5-year unsecured bond with a coupon of 5% per annum, redeemable at par and issued at a 6% discount to par will have a yield to maturity of 6.47%. This is calculated by assuming a nominal value of Rs 100 and calculating net present values (NPVs) at 5% and 7% discount rates. Calculate YTM in percentage

2 points

QUESTION 6

1. b. Discount Grocerys has issued a bond with a coupon rate of 11%. It closed at a price of Rs 1023.75. What is the bond's current yield?

2 points

QUESTION 7

1. Zinat Company. issued zero coupon bonds that sold for Rs 190 and are due in 15 years. Determine the yield to maturity (to the nearest tenth of 1 percent) if you purchased the bond at the issue price.

2 points

QUESTION 8

1. Jannat company has declared a dividend of 20 cents per share and has a cost of equity of 15%. A constant dividend for 4 years and then 7% per annum in perpetuity thereafter what is the value of share in dollars

2 points

QUESTION 9

1. Stock X has a 10% expected return, a beta coefficient of 0.8, and a 25% standard deviation of expected returns. Stock Y has a 14.6% expected return a beta coefficient of 1.4, and a 25% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. Calculate each stock's coefficient of variation