Q1 (A). An investment of $100 produces rate of return as follows In year 1: a gain of 10 percent In year 2: a loss of 5% percent In year 3: a loss of 8 percent In year 4: a gain of 3 percent. Calculate the value of the investment at the end of the fourth year and calculate the mean annual rate of return. Q1 (B). What is more important for a firm–profit maximization or value maximization? What issues or conflict of interest can come up between owners and managers and how can they be solved? Q2 (A). On January 12, 2008 Best buy purchases a lot for $48000. The business made a partial payment of $10000 once every thirty days, beginning February 11. On June 11 it plan to make the last payment plus the interest. If the rate of interest is 8%, what is the amount due? Q2 (B). An instrument having a face value of $1000 is discounted at 6% for three years and two months. Find the proceeds and compound discount. Q2 (C). You have an outstanding loan currently. The bank requires you to pay in three installments at the end of each of the next three years the amount of which will be $1000. You had a good credit history and your bank has offered you that in case you have difficulty paying, you can skip making the next two payments but in that case you have to make a large payment at the end of the loans maturity date. If the interest rate is 5% what final payment will be necessary so that you can be indifferent between the two options
Q1 (A). An investment of $100 produces
In year 1: a gain of 10 percent
In year 2: a loss of 5% percent
In year 3: a loss of 8 percent
In year 4: a gain of 3 percent.
Calculate the value of the investment at the end of the fourth year and calculate the mean annual rate of return.
Q1 (B). What is more important for a firm–profit maximization or value maximization? What issues or conflict of interest can come up between owners and managers and how can they be solved?
Q2 (A). On January 12, 2008 Best buy purchases a lot for $48000. The business made a partial payment of $10000 once every thirty days, beginning February 11. On June 11 it plan to make the last payment plus the interest. If the rate of interest is 8%, what is the amount due?
Q2 (B). An instrument having a face value of $1000 is discounted at 6% for three years and two months. Find the proceeds and compound discount.
Q2 (C). You have an outstanding loan currently. The bank requires you to pay in three installments at the end of each of the next three years the amount of which will be $1000. You had a good credit history and your bank has offered you that in case you have difficulty paying, you can skip making the next two payments but in that case you have to make a large payment at the end of the loans maturity date. If the interest rate is 5% what final payment will be necessary so that you can be indifferent between the two options?
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