FIN2601 Assignment 1 (COMPLETE QUESTIONS & ANSWERS) Semester 2 2024 ; 100% satisfaction guarantee

FIN2601 Assignment 1 (COMPLETE QUESTIONS & ANSWERS) Semester 2 2024 ; 100% satisfaction guarantee Question 1 Complete Mark 1.00 out of 1.00 QUIZ Which of the following statements are correct if a company focuses on profits as financial goal? a) Risk is ignored. b) The share price is ignored. c) The size of the investment required to generate the profit is ignored. 1. a and b 2. c and a 3. b and c 4. a, b and c Question 2 Complete Mark 1.00 out of 1.00 Question 3 Complete Mark 1.00 out of 1.00 Which one of the following best describes a capital market? 1. A financial relationship created by institutions and arrangements that allow suppliers and demanders of short-term funds to make transactions. 2. An intangible market for the purchase and sale of securities not listed on organised exchanges. 3. A market that allocates funds to their most productive uses as a result of competition among wealth-maximising investors. 4. A financial relationship created by institutions and arrangements that allow suppliers and demanders of long-term funds to make transactions. The Harddrive, the technology consulting company, given its earnings before interest and tax (EBIT) is R. The company’s time interest earned (TIE) ratio is 8,0, its tax rate is 35%, and its total assets turnover ratio is 1,25 with a sales value of R800 000. What is the company’s return on assets (ROA)? 1. 5,63% 2. 14,21% 3. 17,77% 4. 22,32% Question 4 Complete Mark 1.00 out of 1.00 Question 5 Complete Mark 1.00 out of 1.00 Financial reporting provides information about a company’s economic resources and the claims to those resources and various parties have varying objectives when they examine a company’s financial statements. Which of the following statement is least correct when analysing ratios? 1. Liquidity ratios measures the company ability to meet its financial obligation in the long run. 2. Activity ratios measures the efficiency with which accounts are converted into investments. 3. Profitability ratios measures the company’s profit with respect to profit for the year. 4. Debt ratio is a proportion of total assets financed by the company’s liabilities. Kiddies County clothing company pays 6% interest on its outstanding debt, which amounts to R720 000. The company’s sales are R, its tax rate is 40% and its net profit margin is 10,7%. What is the company time interest earned ratio? 1. 1,74 times 2. 5,73 times 3. 6,74 times 4. 7,80 times Question 6 Complete Mark 1.00 out of 1.00 Question 7 Complete Mark 1.00 out of 1.00 Evolve Health, a pharmaceutical company, the statement of comprehensive income shows R87 960 in earnings before tax (EBIT), interest expense of R62 500 and R10 000 in preference share dividend with a tax rate of 30%. The company had 1 000 number of shares issued and 1 000 number of shares outstanding. If the price/earnings ratio (P/E) is reported as 5,30 and ROE is 23,3%. What is the company’s market to book ratio? 1. R0,81 2. R1,23 3. R2,33 4. R3,91 Gold Screen Studios had profit for the year of R33 503 and preference share dividend of R26 200 at the end of last year. The company sales were R714 000, its total assets turnover was 1,02, and the company’s return on equity (ROE) was 8%. The company is financed entirely with debt and equity. What is the company’s debt ratio? 1. 69,10% 2. 86,96% 3. 91,80% 4. 114,99% Question 8 Complete Mark 1.00 out of 1.00 Question 9 Complete Mark 1.00 out of 1.00 Intel Associates is a consulting business that last year had a cost of goods sold of R20 036 and its inventory turnover was 5,15. The company’s current assets were R25 227 and its current ratio was 2,85. What is the company’s quick ratio? 1. 2,03 2. 2,41 3. 2,85 4. 2,94 Cameron took out a loan of R12 000 at a 9% interest rate and is required to repay it in four equal instalments at the end of each of the next four years. What is the amount of interest he would need to pay in the first year? 1. R1 080,00 2. R2 343,75 3. R2 771,22 4. R3 704,02 Question 10 Complete Mark 1.00 out of 1.00 Question 11 Complete Mark 1.00 out of 1.00 Layla has recently received an insurance settlement amounting to R467 000. She has made the decision to allocate this sum towards her retirement savings. Her current retirement plan entails retiring 30 years from today. If she is able to achieve an average return of 9,5% on her investment, how much more will she have in her retirement account on the day she retires compared to if she had earned a 7% return? 1. R ,28 2. R ,93 3. R ,10 4. R,03 Lincoln has been consistently investing R750 every month for a period of nine years. As of today, his investment account holds a total value of R97 262. What is the average rate of return he has achieved on his investments over this time period? 1. 3,99% 2. 8,94% 3. 33,25% 4. 47,37% Question 12 Complete Mark 1.00 out of 1.00 Question 13 Complete Mark 1.00 out of 1.00 Brittany's car dealer is offering her a new car lease at a monthly payment of R2 345 for a duration of 72 months. These payments are scheduled to commence on the first day of each month, starting from the day she signs the lease agreement. Given an interest rate of 6,6%, what is the present value of the lease? 1. R 35 219,50 2. R139 871,63 3. R424 958,47 4. R422 633,99 Atlas Ventures has a future liability of R90 000 that must be paid eight years from today. To ensure the company has the entire amount available when the debt is due, they intend to open a savings account. The strategy is to make an initial deposit today and subsequently deposit an additional R25 000 each year for the next eight years, starting one year from today. The savings account offers a 7,5% rate of return. How much does the company need to deposit today to meet this obligation? 1. R 50 469,20 2. R196 895,79 3. R207 878,23 4. R541 174,88 Question 14 Complete Mark 1.00 out of 1.00 Question 15 Complete Mark 1.00 out of 1.00 A year ago, Golden Brick Constructors deposited R18 400 in an investment account earmarked for purchasing building materials for a house three years from now. Today, they are adding another R14 000 to this account. The company intends to make a final deposit of R42 000 to the account a year from today. How much will be available when they are ready to purchase the materials, assuming the account earns 5,5% interest? 1. R22 794,37 2. R56 792,00 3. R85 980,80 4. R99 701,61 Sofia's employer contributes R120 per week to her retirement plan. Assuming she continues working for her employer for another 30 years and using a discount rate of 7,5%, what is the present value of this employee benefit to her? 1. R 12 407,93 2. R 40 384,69 3. R 74 416,56 4. R645 212,27 Question 16 Complete Mark 1.00 out of 1.00 Question 17 Complete Mark 1.00 out of 1.00 Jacks Small Engines is aiming to accumulate R980 000 for the purchase of new equipment, which is planned for five years from now. Their strategy involves setting aside an equal sum of money on the first day of each quarter, starting today. The firm expects to earn a 5,65% return on their savings. What is the quarterly savings amount that the firm needs to set aside to reach their financial goal? 1. R42 151,78 2. R42 165,70 3. R42 346,24 4. R42 747,18 Nadine is planning to retire at the age of 60 and anticipates living until she reaches the age of 85. On the day of her retirement, her retirement savings account holds R759 320. She is known for being financially conservative and estimates that her investments will yield a 7% return during her retirement years. In order to exhaust her savings on the day of her passing, how much can she withdraw from her retirement savings each month? 1. R5 329,05 2. R5 335,59 3. R5 366,72 4. R5 609,92 Question 18 Complete Mark 1.00 out of 1.00 Question 19 Complete Mark 1.00 out of 1.00 Paisley has a savings goal of R30 000 that she intends to achieve 12 years from now. If she expects to earn a 8% return on her savings, how much less does she need to deposit today compared to if she were earning a 6% return in order to reach her goal? 1. R 1 700,43 2. R 2 995,67 3. R11 913,41 4. R14 909,08 Today, Abigail borrowed R6 200 on her credit card to buy a 6-seater dining set. The interest rate is 14,9%, compounded monthly. How long will it take her to pay off this debt if she doesn't make any additional charges and makes regular monthly payments of R120? 1. 5,87 years 2. 6,93 years 3. 7,31 years 4. 83,14 years Question 20 Complete Mark 1.00 out of 1.00 Maverick has been presented with two options by his parents. The first option entails receiving annual gifts of R18 000, R22 000, R26 000, and R30 000 at the end of each of the next four years. The second option is a single lump sum payment available today. He is currently evaluating these two offers to determine which one to choose, taking into account a discount rate of 12,5%. What is the minimum lump sum amount he would accept today in order to select the lump sum offer? 1. R70 372,20 2. R71 643,34 3. R78 216,89 4. R79 168,72