lOMoAR cPSD| 16857960
, lOMoAR cPSD| 168
UNIVERSITY EXAMINATIONS
MAY/JUNE 2025
EXAMINATION
FIN3701
Financial Management
70 Marks
Duration: 2 Hours
First Examiner: Mr LP Mamaro
External Examiner: Prof J Hall
Instructions:
This examination is timed. Therefore, you need to complete and submit the examination within the
allocated time. The allocated time has been extended to allow for this.
As the examination is an assessment, it should still be your own work and you should remember to sign
the Honesty Declaration.
Plagiarism checks may be run on your submission.
Print out the examination paper, write your answers on it, and scan and submit your completed paper.
If the space that is provided is not adequate, you may use your own extra paper, but make sure that
you upload the pages in the correct sequence.
You will submit the examination in the same way you submitted your assignments on myUnisa.
This paper consists of 41pages, including an invigilator code on page 3, four pages for rough work (pp
33 to 36), plus appendix A (financial tables) on pages 37 to 41
The examination consists of four questions which must all be answered. Show all your calculations
clearly.
Please note that rough work will not be marked.
, lOMoAR cPSD| 16857960
QUESTION 1 [20 marks]
Rati Enterprises is considering investing in either of two mutually exclusive projects. Cash flows associated with the
two independent investments are given below. The risk-free rate is 8% and the risk premium is 2%.
Project A Year Cash flows Certainty equivalents
0 R 400 000 1.00
1 R 200 000 0.90
2 R 160 000 0.80
3 R 120 000 0.60
4 R 100 000 0.50
5 R 100 000 0.40
Project B
Year Cash inflows Certainty equivalents
0 400 000 1.00
1 205 000 0.90
2 160 000 0.80
3 120 000 0.60
4 100 000 0.50
5 100 000 0.40
Cash inflows are discounted at the risk-free rate of 9%.
REQUIRED
1.1 Use the concept of risk and cash inflows to calculate the NPV and IRR relating to the investment in
project A. (9 marks)
, lOMoAR cPSD| 168
UNIVERSITY EXAMINATIONS
MAY/JUNE 2025
EXAMINATION
FIN3701
Financial Management
70 Marks
Duration: 2 Hours
First Examiner: Mr LP Mamaro
External Examiner: Prof J Hall
Instructions:
This examination is timed. Therefore, you need to complete and submit the examination within the
allocated time. The allocated time has been extended to allow for this.
As the examination is an assessment, it should still be your own work and you should remember to sign
the Honesty Declaration.
Plagiarism checks may be run on your submission.
Print out the examination paper, write your answers on it, and scan and submit your completed paper.
If the space that is provided is not adequate, you may use your own extra paper, but make sure that
you upload the pages in the correct sequence.
You will submit the examination in the same way you submitted your assignments on myUnisa.
This paper consists of 41pages, including an invigilator code on page 3, four pages for rough work (pp
33 to 36), plus appendix A (financial tables) on pages 37 to 41
The examination consists of four questions which must all be answered. Show all your calculations
clearly.
Please note that rough work will not be marked.
, lOMoAR cPSD| 16857960
QUESTION 1 [20 marks]
Rati Enterprises is considering investing in either of two mutually exclusive projects. Cash flows associated with the
two independent investments are given below. The risk-free rate is 8% and the risk premium is 2%.
Project A Year Cash flows Certainty equivalents
0 R 400 000 1.00
1 R 200 000 0.90
2 R 160 000 0.80
3 R 120 000 0.60
4 R 100 000 0.50
5 R 100 000 0.40
Project B
Year Cash inflows Certainty equivalents
0 400 000 1.00
1 205 000 0.90
2 160 000 0.80
3 120 000 0.60
4 100 000 0.50
5 100 000 0.40
Cash inflows are discounted at the risk-free rate of 9%.
REQUIRED
1.1 Use the concept of risk and cash inflows to calculate the NPV and IRR relating to the investment in
project A. (9 marks)
