Unit Name: Business Finance
Assignment: Tutorial Questions Assignment (Individual)
This assignment is designed to assess your level of knowledge of the key topics covered in this unit
Unit Learning Outcomes Assessed:
Each week students were provided with three tutorial questions of varying degrees of difficulty. The tutorial questions are available in the Black Board/ Tutorial Materials/ Tutorial Questions for Final Assessment for each week. The Interactive Tutorials are designed to assist students with the process, skills and knowledge to answer the provided tutorial questions. Your task is to answer a selection of tutorial questions from week 3 to week 11 inclusive and submit these answers in a single document.
The questions to be answered are:
Question 1(11 marks)
(This question is from the Week 4 Tutorial)
|Information||Project A||Project B|
|Cost||$5 550 000||$6 640 000|
|Future Cash Flows Year 1|
1 230 000
2 210 000
1 200 600
1 150 000
1 120 000
2 830 000
1 300 000
1 750 000
1 180 000
1 150 000
Question 2(11 marks)
(This question is from the Week 3 and Week 4 Tutorials)
Alice has $5 000 now. She wants to save $25 000 to buy her first car. She decides to put that $5 000 in an investment fund that pays an interest rate of 10% per annum (per year), compounding annually.
(This question is from the Week 7 and Week 8 Tutorials)
MLC Fund Management is considering the following three (3) options for their new investment portfolio:
Option 1 - A non-callable corporate bond that pays a coupon rate of 8% annually. The bond will mature in 30 years. The yield-to-maturity (YTM) of the bond is 7.5% and the face value of the bond is $1 000.
Option 2 - An ordinary share which just paid a dividend of $6.00 with a constant dividend growth rate of 5% each year. The current market price of this share is $85.
Option 3 - A $100 par value preference-share which pays a fixed dividend of 6%. The required rate of return for the preference shares with the same risk is 8%.
Question 4(7 marks)
(This question is from the Week 9 Tutorial)
Marcus has an investment portfolio that paid the rate of return of 24.75%, -11%, - 30%, 19%, 15.5%, 12% and 20% over the last seven (7) years.
|State of economy||Probability of the economic state||Rate of Return|
(This question is from the Week 10 Tutorial)
Osborne Construction currently has the following capital structure:
Debt: $20,500,000 paying 9.5% coupon bonds outstanding with 15 years to maturity, an annual before-tax yield to maturity of 8% on a new issue. The bonds currently sell for
$1,125 per $1,000 face value.
Ordinary Shares: 100,000 shares outstanding currently selling for $45 per share. The company just paid a $3.50 dividend per share and is experiencing a 5% growth rate in dividends, which it expects to continue indefinitely.
(Note: The firm's marginal tax rate is 30%.)
(This question is from the Week 11 Tutorial)
The following data is available for Quick Serve Trading Ltd.
|Long term debts||327,500||325,800|
|Total cost of sales||265,000|
(Note - Assume that all sales are on credit)
The assignment will be submitted via Blackboard. Each student will be permitted only ONE submission to Blackboard. You need to ensure that the document submitted is the correct one.
Holmes Institute is committed to ensuring and upholding Academic Integrity, as Academic Integrity is integral to maintaining academic quality and the reputation of Holmes’ graduates. Accordingly, all assessment tasks need to comply with academic integrity guidelines. Table 1 identifies the six categories of Academic Integrity breaches. If you have any questions about Academic Integrity issues related to your assessment tasks, please consult your lecturer or tutor for relevant referencing guidelines and support resources. Many of these resources can also be found through the Study Skills link on Blackboard.
Academic Integrity breaches are a serious offence punishable by penalties that may range from deduction of marks, failure of the assessment task or unit involved, suspension of course enrolment, or cancellation of course enrolment.
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