QUESTION 1: Introduction to financial management [5] 1.1 Identify which of financial accounting, cost accounting and management accounting relates to each of the following: Cost control Preparing budgets and forecasts Presenting financial activity and position 1.2 Both the finance function and the marketing function have the maximisation of shareholder wealth as a core purpose. Explain how each of the two functions creates shareholder wealth in a different manner. 1.3 Describe how marketing can affect the share price. (1) (2) 3 QUESTION 2: Time value of money [15] 2.1 Assume a firm makes a R3 500 deposit into its money market account. If this account is currently paying interest of 0,7%, what will the account balance be after one year? (2) 2.2 If David and July combine their savings of R4 250 and R1 750 respectively, and deposit this amount into an account that pays 6% annual interest, compounded monthly, what will the balance in the account be after four years? (2) 2.3 Joel just won R2,5 million in the lottery. She is given the option of receiving a total of R1,3 million now, or she can elect to be paid R100 000 at the end of every year for the next 25 years. If Joel can earn 5% annually on her investment from a strict economic point of view, which option should she take? (5) 2.4 Joseph is a friend of yours. He has plenty of money but little finance sense. He received a considerable amount as a gift for his recent graduation and is looking for a bank in which to deposit the funds. HSBC Bank offers an account with an annual interest rate of 4% compounded monthly, while Dutch Bank offers an account with a 4,05% annual interest rate compounded quarterly. Recommend to Joseph which account he should choose. (3) 2.5 Gin and Tonic have just had their first child. If college is expected to cost R200 000 per year in 18 years, how much should the couple begin depositing annually at the end of every year to accumulate enough funds I pay the first year's tuition at the beginning of the 19th year? Assume that the an earn a 6% annual interest rate on their investment. (3)