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1.) An amount of R1 500 is deposited in a bank paying an annual interest rate of 4.3%, compounded quarterly. Find the balance after 6 years. 2.) Your goal is to accumulate R30 000 after 17 years from now. How much must you invest now

1.) An amount of R1 500 is deposited in a bank paying an annual interest rate of 4.3%, compounded quarterly. Find the balance after 6 years. 2.) Your goal is to accumulate R30 000 after 17 years from now. How much must you invest now

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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1.) An amount of R1 500 is deposited in a bank paying an annual interest rate of 4.3%, compounded quarterly. Find the balance after 6 years. 2.) Your goal is to accumulate R30 000 after 17 years from now. How much must you invest now to have, at an interest rate of 8% compounded semi-annually? 3.) If R500 accumulated to R700 in 5 years with a certain interest compounded quarterly, what is the rate of interest? 4.) A debt of R5000 is to be amortised by 5 quarterly payments made at 3 month intervals. If interest is charged at the rate of 12% convertible quarterly, find the period payment and construct an amortisation schedule. Round the payment up to the nearest cent. 5.) Raees Braai Ltd has the following capital structure: Equity, 2000000, R2, ordinary shares, market price R2, 50 Preference, 1000000, 12%, R1 preference shares, market price R1,20 Reserves R1500 000 Bank loan R500 000, 15% bank loan Debentures R 1750000,16% debentures, market price R110 (issued at R100). The current and expected future rate of ordinary share dividend is 20%. What is the firm's weighted average cost of capital? 6.) SK Handelaars is a logistics company based in Polokwane, South Africa. They are deciding whether to pay out R120 000 in excess cash in the form of an extra dividend or implement a share buyback/repurchase. Their profits for the current year are R1.95 per share and the share sells for R 18. Their summarised balance sheet prior to the dividend payment is as follows (all figures in ZAR). a) Calculating the number of shares in issue. b) The dividends per share (for the first alternative and pay the dividend). c) Calculate: the new share price, the Earnings per share and the price - earnings ratio. d) What alternative do you consider to be the best? Why?
Transcribed Image Text:1.) An amount of R1 500 is deposited in a bank paying an annual interest rate of 4.3%, compounded quarterly. Find the balance after 6 years. 2.) Your goal is to accumulate R30 000 after 17 years from now. How much must you invest now to have, at an interest rate of 8% compounded semi-annually? 3.) If R500 accumulated to R700 in 5 years with a certain interest compounded quarterly, what is the rate of interest? 4.) A debt of R5000 is to be amortised by 5 quarterly payments made at 3 month intervals. If interest is charged at the rate of 12% convertible quarterly, find the period payment and construct an amortisation schedule. Round the payment up to the nearest cent. 5.) Raees Braai Ltd has the following capital structure: Equity, 2000000, R2, ordinary shares, market price R2, 50 Preference, 1000000, 12%, R1 preference shares, market price R1,20 Reserves R1500 000 Bank loan R500 000, 15% bank loan Debentures R 1750000,16% debentures, market price R110 (issued at R100). The current and expected future rate of ordinary share dividend is 20%. What is the firm's weighted average cost of capital? 6.) SK Handelaars is a logistics company based in Polokwane, South Africa. They are deciding whether to pay out R120 000 in excess cash in the form of an extra dividend or implement a share buyback/repurchase. Their profits for the current year are R1.95 per share and the share sells for R 18. Their summarised balance sheet prior to the dividend payment is as follows (all figures in ZAR). a) Calculating the number of shares in issue. b) The dividends per share (for the first alternative and pay the dividend). c) Calculate: the new share price, the Earnings per share and the price - earnings ratio. d) What alternative do you consider to be the best? Why?
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