QUESTION 1 Discuss the following using a practical references and examples from the Nigerian Financial Markets: 1. Treasury Bills II. Treasury certificates III. Bonds IV. Finance Bill 2020 (25 marks). QUESTION 2 Baze University is produces a range of central heating systems for sale to builders' merchants. As a result of increasing demand for the businesses' products, the directors have decided to expand production. The cost of acquiring new plants and machinery and the increase in working capital requirements are planned to be financed by a mixture of long-term and short-term borrowing. Required a) As the director of finance of Baze University, discuss the major factors that should be considered when deciding on the appropriate mix of long-term borrowing necessary to finance the expansion programme. b) List and explain the appropriate finance mix to Baze University as follows: I. Three short-term sources of finance II. Three long-term sources of finance (25 marks) QUESTION 3 Baze University is evaluating two investment projects, as follows. Project 1 This is an investment in new machinery to produce a recently-developed product. The cost of the machinery, which is payable immediately, is $1.5 million, and the scrap value of the machinery at the end of four years is expected to be $100,000. Tax-allowable depreciation can be claimed on this investment on a 25% reducing balance basis. Information on future returns from the investment has been forecast to be as follows: Year 1 2 3 4 140,00 Sales Volume (unit/Year) 50,000 95,000 0 75,000 Selling Price (S/unit) 25 24 23 23 Variable Cost (S/unit) 10 11 12 12.5 105,00 115.00 125,00 125.00 Fixed cost (year) 0 0 0 0 This information must be adjusted to allow for selling price inflation of 4% per year and variable cost inflation of 2.5% per year. Fixed costs, which are wholly attributable to the project, have already been adjusted for inflation. Baze pays profit tax of 30% per year one year in arrears