cameroon gce advance level business mathematics 2
cameroon gce advance level business mathematics 2
A business undertakes an investment with a minimum expected rate of return of 17% per year. The proposed cash flow is:
| Year | 0 | 1 | 2 | 3 | 4 |
| Cash flow (FCFA) | (100,000) | 36,000 | 50,000 | 40,000 | 20,000 |
a) Calculate the Net Present Value (NPV) of the project if the cost of capital is 15% and 20% (8 marks)
b) Use the NPV calculated in “a” to estimate the Internal Rate of Return (IRR) (6 marks)
c) Recommend whether the project should be undertaken based on the IRR (2 marks)
(Total = 16 marks)
2. A mother shares a sum of 1,500,000FCFA among his three children; A, B and C aged on the day of sharing 12, 13, and 16
years respectively. The sharing is made such that each child receives the same amount at the age of 18years. If the compound
interest rate is 7.5%, how much will each child receive?
(Total = 14 marks)
3. Numun PLC issued a debenture loan with the following characteristics:
– Number of debentures: 1000 debentures
–
| Nominal interest rate: Nominal value: Redemption price: Maturity date: Calculate the following: |
10.5% 10,000FCFA 10,500FCFA 18 years |
| i) | The interest coupon |
| ii) | The real rate |
| iii) iv) |
The first amortization The constant annuity |
– – – a) (2 marks)
(2 marks)
(3 marks)
(3 marks)
b) Present the first two lines of the amortization schedule (4 marks)
(Total = 14 marks)
4. The issue capital of Ibu and Son’s company is made up of 20% preference shares of 5,000FCFA each and 4,000FCFA
ordinary shares all fully paid. The following data for Ibu & Son is related to 2018:
– Profits 20,000,000FCFA
– Brought forward from 2017 10,000,000FCFA
– Ordinary dividend at 20% 4,000,000FCFA
– Preference share dividend 6,000,000FCFA
Calculate:
a) The balance carried forward to 2019 (4 marks)
b) The total capital of Ibu and Son (5 marks)
c) The number of ordinary shares and preference shares issued (5 marks)
(Total = 14 marks)
