DSC1630 Assignment 4 (DETAILED ANSWERS) Semester 2 2024 - DISTINCTION GUARANTEED

DSC1630 Assignment 4 (DETAILED ANSWERS) Semester 2 2024 - DISTINCTION GUARANTEED - DISTINCTION GUARANTEED - DISTINCTION GUARANTEED Answers, guidelines, workings and references .. Question 1 Complete Mark 1.00 out of 1.00 QUIZ Sophie wants to buy the Ever-so-Young shop around the corner. The following cash fl ows are involved Time in years Cash fl ows (R) 2 200 000 3 –500 000 7 700 000 8 850 000 9 –210 000 Sophie can borrow money at 19% per annum while she can invest at 17,5% per annum. The present value of the cash outfl ows is a. R340 590,94. b. R357 407,06. c. R524 888,51. d. R535 703,05. Question 2 Complete Mark 1.00 out of 1.00 Question 3 Complete Mark 1.00 out of 1.00 The following is the price equation for Bond 733: The yearly yield to maturity is a. 7,87%. b. 15,74%. c. 16,55%. d. 19,39%. 96, 80770 = 7, 5a1¬5 i + 32, 09888 An estate agent suspects that a linear relationship exists between the number of houses sold ( y ) and the monthly loan payments ( x ). Heanalyses the following data over the past fi ve months: Monthly loanpayments inR1 000's ( x ) Number of housessold ( y ) 3,7 16 5,6 25 7,5 80 18,9 45 28,4 12 The slope of the linear regression line is approximately a. −0,66. b. −0,25. c. −0,09. d. 10,53. Question 4 Complete Mark 1.00 out of 1.00 Question 5 Complete Mark 1.00 out of 1.00 Question 6 Complete Mark 1.00 out of 1.00 An estate agent suspects that a linear relationship exists between the number of houses sold ( y ) and the monthly loan payments ( x ). Heanalyses the following data over the past fi ve months: Monthly loanpayments inR1 000's ( x ) Number of housessold ( y ) 3,7 16 5,6 25 7,5 80 18,9 45 28,4 12 The correlation coeffi cient is approximately a. −0,66. b. −0,25. c. −0,09. d. +1,40. The standard deviation is a. the square root of the variance. b. a measure of variability. c. an approximate indicator of how numbers vary from the mean. d. all of the other options. A linear correlation coeffi cient of r = −0,95 that has been calculated for a data set means a. the linear relationship between two variables is weak. b. the non-linear relationship between two variables is strong. c. the linear relationship between two variables is strong but negative. d. the linear relationship between two variables is strong and positive. Question 7 Complete Mark 1.00 out of 1.00 Question 8 Complete Mark 1.00 out of 1.00 A banker has collected the following sample data of the number of loans he approved per day, in the past week: 3 5 12 3 2 The variance of the data set, rounded off to one decimal place, is a. 4,1. b. 13,2. c. 16,5. d. 80,0. Sophie wants to buy the Ever-so-Young shop around the corner. The following cash fl ows are involved Time in years Cash fl ows (R) 2 200 000 3 –500 000 7 700 000 8 850 000 9 –210 000 Sophie can borrow money at 19% per annum while she can invest at 17,5% per annum. The future value of the cash infl ows is a. R2 346 412,58. b. R2 403 837,84. c. R2 583 623,93. d. R2 678 633,08. Question 9 Complete Mark 1.00 out of 1.00 Question 10 Complete Mark 1.00 out of 1.00 Sophie wants to buy the Ever-so-Young shop around the corner. The following cash fl ows are involved Time in years Cash fl ows (R) 2 200 000 3 –500 000 7 700 000 8 850 000 9 –210 000 Sophie can borrow money at 19% per annum while she can invest at 17,5% per annum. The MIRR of this shop is a. 18,10%. b. 19,72%. c. 23,59%. d. 25,25%. If the profi tability index of a company is 1,0514 and the NPV (net present value) equals R25 700, then the original investment is approximately a. R12 528. b. R13 172. c. R25 700. d. R500 000. Question 11 Complete Mark 1.00 out of 1.00 Question 12 Complete Mark 1.00 out of 1.00 Question 13 Complete Mark 1.00 out of 1.00 Eva bought the Angel Face Boutique for R120 000. Her estimated cash infl ows for the next fi ve years are R15 000, R28 000, R42 000, R35 000and R40 000. The IRR is approximately a. 6,66%. b. 9,16%. c. 10,01%. d. 11,93%. Eva bought the Angel Face Boutique for R120 000. Her estimated cash infl ows for the next fi ve years are R15 000, R28 000, R42 000, R35 000and R40 000. If the NPV equals R4 500, then the cost of capital is a. 7,92%. b. 8,78%. c. 10,27%. d. 25,70%. Consider Bond XYZ Coupon rate: 12,6% per year Yield to maturity: 9,5% per year Settlement date: 9 May 2022 Maturity date: 29 September 2028 The all-in price is a. R109,89791%. b. R112,76174%. c. R113,93381%. d. R115,97475%. Question 14 Complete Mark 1.00 out of 1.00 Question 15 Complete Mark 1.00 out of 1.00 The equation for the present value of Bond AAA on 24/06/2022 is given by and the fraction of the half year to be discounted back is 74/181. The accrued interest is a. −R1,49014%. b. −R2,98027%. c. R4,30932%. d. R31,63747%. P (24/6/2022) = 7, 35a2¬9 0,135÷2 + 100(1 + ) 0, 135 2 −29 The equation for the present value of Bond AAA on 24/06/2022 is given by and the fraction of the half year to be discounted back is 74/181. The clean price for Bond AAA is a. R107,56456%. b. R109,02688%. c. R111,87388%. d. R114,90174%.