Question 2 Joyce has just contracted to sell a small parcel of land that she inherited a few years ago. The buyer is willing to pay R28 000 at the closing of the transaction or will pay the amounts shown in the following table at the beginning of each of the next five years. Because Joyce doesn't really need the money today, she plans to let it accumulate in an account that earns 10% annual interest. Given her desire to buy a house at the end of five years after closing on the sale of the lot, she decides to choose the payment alternative - R28 000 lump sum or mixed stream of payments in the following table - that provides the highest future value at the en of five years. Beginning of Year (0) Cash Flows in Hands) 4 5 000 9000 12 000 15 000 2.1. 2.2 2.3 What is the future value of the lump sum at the end of Year What is the future value of the mixed stream at the end of You Based on your findings in parts (2.1) and (2.2), which alternative show anyone? [2] If Joyce could earn 15% rather than 10% on the funds, would your recommendation in part (2.3) change? Explain. 2.4. 10 marks QUESTION 3 One bond has MBL5903 Module overview - Strategic financial management 7.2 Calculate the standard deviation of NPV and the coefficient of variance of the NPV. Interpret these results taking into consideration the state of the economy. 16) 16 marks Question 8 M Patel has approached you for advice on how best to invest his savings. You propose that he should invest all his savings in shares in either Sanlam or Sasol. Alternatively, he could his investment between these two (share companies). There are three possible states sion - and the retums on Sanlam and Sasol shares | yound ped wex3 MBL.5903 Module overview - Strategies financiare Z! ZAXMAN Moog 11SIOON 13 10 Beginning of Year (0) 1 2 3 4 5 Cash Flows (in Rands) 3 000 6 000 9 000 12 000 15 000 2.1. 2.2. 2.3 What is the future value of the lump sum at the end of Year 5? 131 What is the future value of the mixed stream at the end of Year 5? 14 Based on your findings in parts (2.1) and (2.2), which alternative should Joyce take? [2] If Joyce could earn 15% rather than 10% on the funds, would your recommendation in part (2.3) change? Explain. 16] 2.4. 10 marks QUESTION 3 Threw has recently issued two bonds with semi-annual payments of R50. One bond has of 10 years. Both bonds currently sell at