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Title Name Amity Solved Assignment PGDM IB for International Financial Management
University AMITY
Service Type Assignment
Course PGDM-(International-Business)
Semister Semester-II Cource: PGDM-(International-Business)
Short Name or Subject Code International Financial Management
Commerce line item Type Semester-II Cource: PGDM-(International-Business)
Product Assignment of PGDM-(International-Business) Semester-II (AMITY)

Solved Assignment


  Questions :-

                                                                                                                                  International Financial Management

Assignment A

  1. What are the factors affecting the capital structure of the company?

 The company raised preference share capital of $ 100000 by the issue of 10% preference share of $ 10 each. The floatation cost is 1%. Find out the cost of preference share capital issued at i) 10% premium ii) 10% discount

  1. Why is the consideration of time important in financial decision making? How can time be adjusted?
  2. What is the need of International Financial Management? List out the difference between domestic Finance & International Finance.

 

 

 

 

Assignment B

Case study

Fixed Cost other than depreciation are Rs. 20 million in year 1 and is expected to rise by 10% per year. Other Information: All profit after tax realized by the affiliate are transferable to the parent company at the end of each year. Depreciation funds are to be blocked until the end of year 5. These funds may be invested in local money market instruments, fetching a tax-free return of 15%. When the operating assets are turned over a local corporation, the balance of these funds including interest may be repatriated. The income tax rate in India is 48% but there are no withholding tax on transfer of dividends. Dividends received by Merck International in the United States would be subject to 50% tax. Merck International uses a 20% weighted average cost of capital for evaluating domestic projects similar to the ones planned in India. For Foreign projects in developing countries a 6% political premium is added.

Please give your answer in at least 25 words and press save and continue button.

  1. Calculate the NPV and IRR for the project from the standpoint of the parent company
  2. What are your recommendations for the proposal?

 

 

 

 

 

 

Assignment C

Question No: 1

The Financial Leverage gives the relationship between

  1. Sales revenue & EBIT of the firm
  2. EBIT & EPS of the firm
  3. Sales Revenue & EPS of the firm
  4. `None of above

 

 

Question No: 2

The Combined Leverage gives the relationship between

  1. Sales revenue & EBIT of the firm
  2. EBIT & EPS of the firm
  3. Sales Revenue & EPS of the firm
  4. None of above

 

 

Question No: 3

The operating profit is same as:

  1. Net profit
  2. EBIT
  3. Gross profit
  4. None of the above

 

 

Question No: 4

The EBIT is:

  1. Earnings before interest on taxes
  2. Earnings before interest & taxes
  3. Earnings before income & taxes
  4. Earnings before income tax

 

 

Question No: 5

EPS is:

  1. Earnings per share
  2. Earnings profits
  3. Earnings per sales
  4. Earnings per year

 

 

Question No: 6

The weighted average cost of capital is calculated:

  1. on market value but not book value
  2. on both market value & book value
  3. on book value but not market value
  4. none of the above

 

 

Question No: 7

When we want to go to future value of an Annuity, we use;

  1. present value factor tables
  2. present value annuity factor tables
  3. compounded value factor tables
  4. compounded value annuity factor tables

 

 

Question No: 8

When we want to come to the present value from future value of an Annuity, we use;

  1. present value factor tables
  2. present value annuity factor tables
  3. compounded value factor tables
  4. compounded value annuity factor tables

 

 

Question No: 9

Capital Budgeting means;

  1. Budgeting of the capital for investments in the long term Fixed assets
  2. Financing of the capital for investments in the long term Fixed assets
  3. Mitigating the losses
  4. Preparing cash budgets

 

 

Question No: 10

In capital budgeting, when money is going out of the firm, it is called

  1. Cash outflow
  2. Cash inflow
  3. Dividend
  4. Interest received

 

 

Question No: 11

The mutually exclusive decisions are those,

  1. acceptance of one proposal will automatically reject the the other proposal
  2. acceptance of both the two proposals
  3. rejection of all the proposals
  4. does not include any proposal

 

 

Question No: 12

In capital budgeting, when money is coming in the firm, it is called

  1. Cash outflow
  2. Cash inflow
  3. Dividend
  4. Interest foregone

 

 

Question No: 13

Which of the following is not the reason for Time Preference of money?

  1. Future uncertainties
  2. Investment opportunities
  3. Interest income
  4. The value of money will remain the same every time

 

 

Question No: 14

Capital structure of a firm means:

  1. The proportion of Debt & equity
  2. Structure of financing ratio
  3. Cash & capital proportion
  4. Drawings by the owner

 

 

Question No: 15

Which of the following is not a factor effecting capital structure?

  1. Flexibility
  2. Control
  3. Size
  4. Profitability ratios

 

 

Question No: 16

The Operating Leverage gives the relationship between

  1. Sales revenue & EBIT of the firm
  2. EBIT & EPS of the firm
  3. Sales Revenue & EPS of the firm
  4. None of above

 

 

Question No: 17

The cost of Debt is always calculated

  1. Before tax
  2. After tax
  3. After dividend
  4. Before interest

 

 

Question No: 18

The cost of equity takes into account the

  1. The market price of the share
  2. The book value of the share
  3. The last years dividend
  4. all the above

 

 

Question No: 19

The cost of Retained Earnings is same as:

  1. Cost of Equity
  2. Cost of Debt
  3. Cost of preference shares
  4. All of the above

 

 

Question No: 20

The optimum capital structure is the one with

  1. highest value of the firm
  2. Lowest value of the firm
  3. highest shares in numbers
  4. highest debt

 

 

Question No: 21

International Finance is

  1. Same as domestic finance
  2. different from domestic finance
  3. not so relevant
  4. is used while shutting down of a firm

 

 

Question No: 22

Which of the following is not a function of finance Manager?

  1. Financing the capital decisions
  2. investing the capital in profitable projects
  3. distributing the capital among different suppliers of products
  4. Dividend decision

 

 

Question No: 23

__________ is concerned with the maximization of a firm´s earnings after taxes.

  1. Shareholder wealth maximization
  2. Profit maximization
  3. Stakeholder maximization
  4. EPS maximization

 

 

Question No: 24

Which of the following statements is correct regarding profit maximization as the primary goal of the firm?

  1. Profit maximization considers the firm´s risk level.
  2. Profit maximization will not lead to increasing short-term profits at the expense of lowering expected future profits.
  3. Profit maximization does consider the impact on individual shareholder´s EPS.
  4. Profit maximization is concerned more with maximizing net income than the stock price.

 

 

Question No: 25

You need to understand financial management even if you have no intention of becoming a financial manager. One reason is that the successful manager of the not-too-distant future will need to be much more of a __________ who has the knowledge and ability to move not just vertically within an organization but horizontally as well. Developing __________ will be the rule, not the exception.

  1. Specialist; specialties
  2. Generalist; general business skills
  3. Technician; quantitative
  4. Team player; cross-functional capabilities

 

 

Question No: 26

What one is not the decision of financial management?

  1. Asset management decision
  2. Financing decision
  3. Investment decision
  4. Dividend decision

 

 

Question No: 27

Which of the following statements is not correct regarding earnings per share (EPS) maximization as the primary goal of the firm?

  1. EPS maximization ignores the firm´s risk level.
  2. EPS maximization does not specify the timing or duration of expected EPS.
  3. EPS maximization naturally requires all earnings to be retained.
  4. EPS maximization is concerned with maximizing net income

 

 

Question No: 28

Money has time value because

  1. Money in hand today is more certain than money to be got tomorrow.
  2. The value of money -gets discounted as time goes by.
  3. The value of money gets compounded as time goes by.
  4. None of the above

 

 

Question No: 29

In order to find the value in 1995 of a sum of $ 100 invested in 1993 at X% interest

  1. The FVIFA table should be used.
  2. The PVIFA table should be used.
  3. The FVIF table should be used.
  4. None of the above

 

 

Question No: 30

The relationship between effective rate of interest (r) and nominal rate of interest (i) is best represented by

  1. i = (1 + 1)−mmr
  2. r = (1 + 1)−nnr
  3. r = (1 + 1)−mmr
  4. None of the above

 

 

Question No: 31

If you invest $ 10,000 today for a period of 5 years, what will be the maturity value if the interest rate is?

  1. 8%
  2. 10%
  3. 12%
  4. 15%

 

 

Question No: 32

You are considering investing $ 1,500 at an interest rate of 5% compounded annually for 2 years or investing the $1,500 at 7% per year simple interest rate for 2 years. Which option is better?

  1. Simple Interest by $56.25
  2. Compound Interest by $114.05
  3. Compound Interest by $52.75
  4. Simple Interest by $75.19

 

 

Question No: 33

What will be the amount accumulated by $ 9,000 in 9 years if it is compounded at a rate of 9% per year?

  1. F = $ 18,229.30
  2. F = $ 19,547.04
  3. F = $ 20,978.22
  4. F = $ 19,055

 

 

Question No: 34

If Rs300 is invested now, Rs500 two years from now, and Rs700 four years from now at an interest rate of 3% compounded annually, what will be the total amount in 10 years?

  1. F = Rs 1,872.40
  2. F = Rs 1,540.27
  3. F = Rs 1,975.11
  4. F = Rs 1,801.36

 

 

Question No: 35

An individual deposits an annual bonus into a savings account that pays 5% interest compounded annually. The size of the bonus increases by Rs200 each year and the initial bonus amount at t=1 was Rs250. Determine how much will be in the account immediately after the fifth deposit.

  1. F = Rs3019.59
  2. F = Rs3483.89
  3. F = Rs2953.94
  4. F = 95

Solved by www.solvezone.in do not copy; plagiarism warning; contact: 8882309876

 

 

Question No: 36

What is the equal-payment series for 10 years that is equivalent to a payment series of Rs 15,000 at the end of the first year (t=1) decreasing by Rs300 each year over 10 years? Interest is 9% compounded annually.

  1. A = Rs 7120.85
  2. A = Rs 10,118.72
  3. A = Rs 12,929.01
  4. A = Rs 13,860.66

 

 

Question No: 37

The time value of money in the present year will be

  1. less than the value of future year
  2. more than the value of the future year
  3. will be the same in future year
  4. will be in negative

 

 

Question No: 38

Which is the best measure of capital budgeting?

  1. Payback period
  2. Annual rate of return
  3. Profitability index
  4. NPV

 

 

Question No: 39

When we want to go to future value of a lump sum amount, we use;

  1. present value factor tables
  2. present value annuity factor tables
  3. compounded value factor tables
  4. compounded value annuity factor tables

 

 

Question No: 40

When we want to come to the present value from future value of a lump sum amount, we use;

  1. present value factor tables
  2. present value annuity factor tables
  3. compounded value factor tables
  4. compounded value annuity factor tables

Solved by www.solvezone.in do not copy; plagiarism warning; contact: 8882309876

  Answers :-

                                                                                                                                  International Financial Management

Assignment A

  1. What are the factors affecting the capital structure of the company?

 The company raised preference share capital of $ 100000 by the issue of 10% preference share of $ 10 each. The floatation cost is 1%. Find out the cost of preference share capital issued at i) 10% premium ii) 10% discount

Answer:

The primary factors that influence a company´s capital-structure decision are:

  1. Business Risk

Excluding debt, business risk is the basic risk of the company´s operations. The greater the business risk, the lower the optimal debt ratio.

As an example, let´s compare a utility company with a retail apparel company. A utility company generally has more stability in earnings. The company has les risk in its business given its stable revenue stream. However, a retail apparel company has the potential for a bit more variability in its earnings. Since the sales of a retail apparel company are driven primarily by trends in the fashion industry, the business risk of a retail apparel company is much higher. Thus, a retail apparel company would have a lower optimal debt ratio so that investors feel comfortable with the company´s ability to meet its responsibilities with the capital structure in both good times and bad.

  1. Company´s Tax Exposure

Debt payments are tax deductible. As such, if a company´s tax rate is high, using debt as a means of financing a project is attractive because the tax deductibility of the debt payments protects some income from taxes.

  1. Financial Flexibility

This is essentially the firm´s ability to raise capital in bad times. It should come as no surprise that companies typically have no problem raising capital when sales are growing and earnings are strong. However, given a company´s strong cash flow in the good times, raising capital is not as hard. Companies should make an effort to be prudent when raising capital in the good times, not stretching its capabilities too far. The lower a company´s debt level, the more financial flexibility a company has.

The airline industry is a good example. In good times, the industry generates significant amounts of sales and thus cash flow. However, in bad times, that situation is reversed and the industry is in a position where it needs to borrow funds. If an airline becomes too debt ridden, it may have a decreased ability to raise debt capital during these bad times because investors may doubt the airline´s ability to service its existing debt when it has new debt loaded on top.

  1. Management Style

Management styles range from aggressive to conservative. The more conservative a management´s approach is, the less inclined it is to use debt to increase profits. An aggressive management may try to grow the firm quickly, using significant amounts of debt to ramp up the growth of the company´s earnings per share (EPS).

  1. Growth Rate

Firms that are in the growth stage of their cycle typically finance that growth through debt, borrowing money to grow faster. The conflict that arises with this method is that the revenues of growth firms are typically unstable and unproven. As such, a high debt load is usually not appropriate.

More stable and mature firms typically need less debt to finance growth as its revenues are stable and proven. These firms also generate cash flow, which can be used to finance projects when they arise.

  1. Market Conditions

Market conditions can have a significant impact on a company´s capital-structure condition. Suppose a firm needs to borrow funds for a new plant. If the market is struggling, meaning investors are limiting companies´ access to capital because of market concerns, the interest rate to borrow may be higher than a company would want to pay. In that situation, it may be prudent for a company to wait until market conditions return to a more normal state before the company tries to access funds for the plant.

Cost of 10% preference share capital

(i)

When share of Rs. 10 is issued at 10% premium

p

= D / P

0

 = 10 / 11 x 100= 9.09 %( ii)

When share of Rs. 10 is issued at 10% discount 

p

= PD / P

0

 = 10 / 9 x 100= 11.11%

 

 

  1. Why is the consideration of time important in financial decision making? How can time be adjusted?

Answer:

Most financial decisions, such as the purchase of assets or procurement of funds, affect the firm’s cash flows in different time periods. Cash flows occurring in different time periods are not comparable. Hence, it is required to adjust cash flows for their differences in timing and risk. The value of cash flows to a common time point should be calculated. To maximise of owner’s equity, it’s extremely vital to consider the timing and risk of cash flows. The choice of the risk- adjusted discount rate (interest rate) is important for calculating the present value of cash flows. For instance, if time preference rate is 10 percent, it implies that an investor can accept receiving Rs 100 if he is offered Rs 110 after one year. Rs 110 is the future value of Rs 100 today at 10% interest rate. Thus, the individual is indifferent between Rs 100 and Rs 110 a year from now as he/she considers these two amounts equivalent in value. You can also say that Rs 100 today is the present value of Rs 110 after a year at 10% interest rate.

Because you need to know how many years your investment will be ´locked-in´ for, and if the return on investment from your instrument will take care of inflation and other purchases that you may have set aside the money for.

Time is also important because you need to be sure if you can carry on with the same standard of living as of now with your regular income without laying your hands on the investment money

 

 

  1. What is the need of International Financial Management? List out the difference between domestic Finance & International Finance.

Ans:

There are a common set of international financial management practices found across businesses and industries. Popular international financial management practices include:

  • International supply chain management
  • Exposure management
  • Capital financial management
  • Capital budgeting management
  • Currency swap management
  • Distribution management
  • Futures, options, and derivatives management
  • Investment management
  • International accounting management.

 

Functions of a FINANCIAL MANAGER:

  • financial planning and controlling
  • deciding financial policy
  • acquisition of funds
  • investment of funds
  • helping in evaluating decisions
  • maintaining proper liquidity
  • understanding the capital market

 

There are some of main differences between international and domestic financial management. It is include institutions, foreign exchange and political risk, and the required modifications of financial theory and financial instruments.

International financial management requires an understanding of cultural, historical, and institutional differences such as those affecting corporate governance.

Although both domestic firms and multinational enterprise are exposed to foreign exchange risks.

Multinational enterprise also face other risks that can be classified as extensions of domestic finance theory. For  example, the normal domestic approach to the cost of capital, source debt and equity, capital budgeting, working capital management, taxation, and credit analysis need to be modified to accommodate foreign complexities. Moreover, a number of financial instruments that are used in domestic financial management have been modified for use in international management.

 

 

Assignment B

Case study

Fixed Cost other than depreciation are Rs. 20 million in year 1 and is expected to rise by 10% per year. Other Information: All profit after tax realized by the affiliate are transferable to the parent company at the end of each year. Depreciation funds are to be blocked until the end of year 5. These funds may be invested in local money market instruments, fetching a tax-free return of 15%. When the operating assets are turned over a local corporation, the balance of these funds including interest may be repatriated. The income tax rate in India is 48% but there are no withholding tax on transfer of dividends. Dividends received by Merck International in the United States would be subject to 50% tax. Merck International uses a 20% weighted average cost of capital for evaluating domestic projects similar to the ones planned in India. For Foreign projects in developing countries a 6% political premium is added.

Please give your answer in at least 25 words and press save and continue button.

  1. Calculate the NPV and IRR for the project from the standpoint of the parent company

Answer:

Formula:

Where,

C0 = Initial Investment Amount Ci = Cash Flow T = No. of Years

NPV Calculation

Discount Rate = 8%

Initial Invest Amount = 50000000

Number of years         = 5

Year    Cash Flow       Present Value

1          200000                185185.19

2          205000                175754.46

3          250000                  198458.06

4          275000                  202133.21

5          300000                  204174.96

 

So NVP = 4373.52

NPV= ∑ {Period Cash Flow / (1+R) ^T} - Initial Investment

63.75%

 

 

  1. What are your recommendations for the proposal?

Answer:

In my recommendation there is a need to increase the NVP, so this can be increase only if either no of periods is increased or the rate is decreased,

So there is a need of investment at decreased rate.

 

 

3.

Ans.

For company A

Degree of Operating Leverage (DOL)          

1.38

Degree of Financial Leverage (DFL) 

1.18

Degree of Total Leverage (DTL)       

1.64

For company B

Degree of Operating Leverage (DOL)          

1.15

Degree of Financial Leverage (DFL) 

1.08

Degree of Total Leverage (DTL)       

1.24

For company C

Degree of Operating Leverage (DOL)          

3.5

Degree of Financial Leverage (DFL) 

1

Degree of Total Leverage (DTL)       

3.5

 

 

 

Assignment C

Question No: 1

The Financial Leverage gives the relationship between

  1. Sales revenue & EBIT of the firm
  2. EBIT & EPS of the firm
  3. Sales Revenue & EPS of the firm
  4. `None of above

 

 

Question No: 2

The Combined Leverage gives the relationship between

  1. Sales revenue & EBIT of the firm
  2. EBIT & EPS of the firm
  3. Sales Revenue & EPS of the firm
  4. None of above

 

 

Question No: 3

The operating profit is same as:

  1. Net profit
  2. EBIT
  3. Gross profit
  4. None of the above

 

 

Question No: 4

The EBIT is:

  1. Earnings before interest on taxes
  2. Earnings before interest & taxes
  3. Earnings before income & taxes
  4. Earnings before income tax

 

 

Question No: 5

EPS is:

  1. Earnings per share
  2. Earnings profits
  3. Earnings per sales
  4. Earnings per year

 

 

Question No: 6

The weighted average cost of capital is calculated:

  1. on market value but not book value
  2. on both market value & book value
  3. on book value but not market value
  4. none of the above

 

 

Question No: 7

When we want to go to future value of an Annuity, we use;

  1. present value factor tables
  2. present value annuity factor tables
  3. compounded value factor tables
  4. compounded value annuity factor tables

 

 

Question No: 8

When we want to come to the present value from future value of an Annuity, we use;

  1. present value factor tables
  2. present value annuity factor tables
  3. compounded value factor tables
  4. compounded value annuity factor tables

 

 

Question No: 9

Capital Budgeting means;

  1. Budgeting of the capital for investments in the long term Fixed assets
  2. Financing of the capital for investments in the long term Fixed assets
  3. Mitigating the losses
  4. Preparing cash budgets

 

 

Question No: 10

In capital budgeting, when money is going out of the firm, it is called

  1. Cash outflow
  2. Cash inflow
  3. Dividend
  4. Interest received

 

 

Question No: 11

The mutually exclusive decisions are those,

  1. acceptance of one proposal will automatically reject the the other proposal
  2. acceptance of both the two proposals
  3. rejection of all the proposals
  4. does not include any proposal

 

 

Question No: 12

In capital budgeting, when money is coming in the firm, it is called

  1. Cash outflow
  2. Cash inflow
  3. Dividend
  4. Interest foregone

 

 

Question No: 13

Which of the following is not the reason for Time Preference of money?

  1. Future uncertainties
  2. Investment opportunities
  3. Interest income
  4. The value of money will remain the same every time

 

 

Question No: 14

Capital structure of a firm means:

  1. The proportion of Debt & equity
  2. Structure of financing ratio
  3. Cash & capital proportion
  4. Drawings by the owner

 

 

Question No: 15

Which of the following is not a factor effecting capital structure?

  1. Flexibility
  2. Control
  3. Size
  4. Profitability ratios

 

 

Question No: 16

The Operating Leverage gives the relationship between

  1. Sales revenue & EBIT of the firm
  2. EBIT & EPS of the firm
  3. Sales Revenue & EPS of the firm
  4. None of above

 

 

Question No: 17

The cost of Debt is always calculated

  1. Before tax
  2. After tax
  3. After dividend
  4. Before interest

 

 

Question No: 18

The cost of equity takes into account the

  1. The market price of the share
  2. The book value of the share
  3. The last years dividend
  4. all the above

 

 

Question No: 19

The cost of Retained Earnings is same as:

  1. Cost of Equity
  2. Cost of Debt
  3. Cost of preference shares
  4. All of the above

 

 

Question No: 20

The optimum capital structure is the one with

  1. highest value of the firm
  2. Lowest value of the firm
  3. highest shares in numbers
  4. highest debt

 

 

Question No: 21

International Finance is

  1. Same as domestic finance
  2. different from domestic finance
  3. not so relevant
  4. is used while shutting down of a firm

 

 

Question No: 22

Which of the following is not a function of finance Manager?

  1. Financing the capital decisions
  2. investing the capital in profitable projects
  3. distributing the capital among different suppliers of products
  4. Dividend decision

 

 

Question No: 23

__________ is concerned with the maximization of a firm´s earnings after taxes.

  1. Shareholder wealth maximization
  2. Profit maximization
  3. Stakeholder maximization
  4. EPS maximization

 

 

Question No: 24

Which of the following statements is correct regarding profit maximization as the primary goal of the firm?

  1. Profit maximization considers the firm´s risk level.
  2. Profit maximization will not lead to increasing short-term profits at the expense of lowering expected future profits.
  3. Profit maximization does consider the impact on individual shareholder´s EPS.
  4. Profit maximization is concerned more with maximizing net income than the stock price.

 

 

Question No: 25

You need to understand financial management even if you have no intention of becoming a financial manager. One reason is that the successful manager of the not-too-distant future will need to be much more of a __________ who has the knowledge and ability to move not just vertically within an organization but horizontally as well. Developing __________ will be the rule, not the exception.

  1. Specialist; specialties
  2. Generalist; general business skills
  3. Technician; quantitative
  4. Team player; cross-functional capabilities

 

 

Question No: 26

What one is not the decision of financial management?

  1. Asset management decision
  2. Financing decision
  3. Investment decision
  4. Dividend decision

 

 

Question No: 27

Which of the following statements is not correct regarding earnings per share (EPS) maximization as the primary goal of the firm?

  1. EPS maximization ignores the firm´s risk level.
  2. EPS maximization does not specify the timing or duration of expected EPS.
  3. EPS maximization naturally requires all earnings to be retained.
  4. EPS maximization is concerned with maximizing net income

 

 

Question No: 28

Money has time value because

  1. Money in hand today is more certain than money to be got tomorrow.
  2. The value of money -gets discounted as time goes by.
  3. The value of money gets compounded as time goes by.
  4. None of the above

 

 

Question No: 29

In order to find the value in 1995 of a sum of $ 100 invested in 1993 at X% interest

  1. The FVIFA table should be used.
  2. The PVIFA table should be used.
  3. The FVIF table should be used.
  4. None of the above

 

 

Question No: 30

The relationship between effective rate of interest (r) and nominal rate of interest (i) is best represented by

  1. i = (1 + 1)−mmr
  2. r = (1 + 1)−nnr
  3. r = (1 + 1)−mmr
  4. None of the above

 

 

Question No: 31

If you invest $ 10,000 today for a period of 5 years, what will be the maturity value if the interest rate is?

  1. 8%
  2. 10%
  3. 12%
  4. 15%

 

 

Question No: 32

You are considering investing $ 1,500 at an interest rate of 5% compounded annually for 2 years or investing the $1,500 at 7% per year simple interest rate for 2 years. Which option is better?

  1. Simple Interest by $56.25
  2. Compound Interest by $114.05
  3. Compound Interest by $52.75
  4. Simple Interest by $75.19

 

 

Question No: 33

What will be the amount accumulated by $ 9,000 in 9 years if it is compounded at a rate of 9% per year?

  1. F = $ 18,229.30
  2. F = $ 19,547.04
  3. F = $ 20,978.22
  4. F = $ 19,055

 

 

Question No: 34

If Rs300 is invested now, Rs500 two years from now, and Rs700 four years from now at an interest rate of 3% compounded annually, what will be the total amount in 10 years?

  1. F = Rs 1,872.40
  2. F = Rs 1,540.27
  3. F = Rs 1,975.11
  4. F = Rs 1,801.36

 

 

Question No: 35

An individual deposits an annual bonus into a savings account that pays 5% interest compounded annually. The size of the bonus increases by Rs200 each year and the initial bonus amount at t=1 was Rs250. Determine how much will be in the account immediately after the fifth deposit.

  1. F = Rs3019.59
  2. F = Rs3483.89
  3. F = Rs2953.94
  4. F = 95

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Question No: 36

What is the equal-payment series for 10 years that is equivalent to a payment series of Rs 15,000 at the end of the first year (t=1) decreasing by Rs300 each year over 10 years? Interest is 9% compounded annually.

  1. A = Rs 7120.85
  2. A = Rs 10,118.72
  3. A = Rs 12,929.01
  4. A = Rs 13,860.66

 

 

Question No: 37

The time value of money in the present year will be

  1. less than the value of future year
  2. more than the value of the future year
  3. will be the same in future year
  4. will be in negative

 

 

Question No: 38

Which is the best measure of capital budgeting?

  1. Payback period
  2. Annual rate of return
  3. Profitability index
  4. NPV

 

 

Question No: 39

When we want to go to future value of a lump sum amount, we use;

  1. present value factor tables
  2. present value annuity factor tables
  3. compounded value factor tables
  4. compounded value annuity factor tables

 

 

Question No: 40

When we want to come to the present value from future value of a lump sum amount, we use;

  1. present value factor tables
  2. present value annuity factor tables
  3. compounded value factor tables
  4. compounded value annuity factor tables

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