supporting calculations where appropriate. If you provide alternative answers to Questions 3‚ 4‚ 5‚ or 6‚ only the first answer will be marked. If you wish to change your answer‚ you must cross out the answer you do not wish to submit for marking. Time: 4 Hours 2. 3. 12 Question 1 Note: 2 marks each a. Which of the following is least likely to increase market efficiency? 1) Governments relax restrictions on foreign investment. 2) Corporations disseminate more information to investors
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DIVERSIFICATION AND FIRM PERFORMANCE: AN EMPIRICAL EVALUATION Anil M. Pandya and Narendar V. Rao Abstract Diversification is a strategic option that many managers use to improve their firms’ performance. This interdisciplinary research attempts to verify whether firm level diversification has any impact on performance. The study finds that on average‚ diversified firms show better performance compared to undiversified firms on both risk and return dimensions. It also tests the robustness of these
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Purpose Formula Basic Time Value Formulae Future Value of a Single Sum FV = PV ( 1 + i ) N Present Value of a Single Sum FV PV = -----------------( 1 + i)N Solve for N for a Single Sum FV ln ------PV N = --------------------ln ( 1 + i ) Solve for i for a Single Sum i = Present Value of an Ordinary Annuity 1 – 1 ⁄ ( 1 + i )N PV A = Pmt ----------------------------------i Future Value of an Ordinary Annuity ( 1 + i )N – 1 FV A = Pmt ---------------------------i Present Value of an Annuity Due
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lanes and speed zones. Maintaining constant speeds‚ setting traffic lights to coordinate traffic patterns and only allow highway construction after rush hour. Fast food restaurants have two windows‚ pull over spots and new cash card options to reduce time at the window. 2. The primary economies of scale concern spreading the instructor’s salary over a larger class and filling classrooms to capacity (and then some). Diseconomies occur when additional help is required to review homework‚ administer tests
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obligation of $65‚000‚ what recommendation would you make to Jeanie? 3. Fred has inherited $6‚000 from the death of Barney. He would like to use this money to buy Wilma a new rockmobile costing $7‚000 for their 10th anniversary celebration which will take place in 2 years from now. Will Fred have enough money to buy the gift if he deposits his money in an account paying 8 percent compounded semi annually? 4. Kimberly has just won a $20 million lottery‚ which will pay her $1 million at the end
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Marriott Corporation sold its hotel assets to limited partners to reduce assets and in this manner the return on assets it is increased which results in increased profitability. Invest in projects that increase shareholders’ value. The discounted cash flow‚ net present value‚ and internal rate of return calculations to appraise potential investments permit the corporation to invest just in profitable projects. Investment projects at Marriott were selected by discounting the appropriate cash flows
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project will likely add value to the company‚ so we need to consider the return on investment versus the cost of capital. If the return on investment‚ measured by the net present value and internal rate of return‚ exceeds the cost of capital‚ the investment should be taken. In addition‚ we need to evaluate the project’s systematic risk (beta)‚ which includes risks that are not unique to a particular project and not easily manageable by a project team at a given point in time. How can the C.A.P
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Silver star year end function VENUE: The Gallagher grill at the Midrand Gallagher Estate Seeing that Gallagher is centrally located between Pretoria and Johannesburg and provides secure parking I decided to choose this venue. Gallagher is conveniently positioned in the business hub of Gauteng and most staff members stays in Pretoria and Johannesburg and it will make life easier for them to travel back home after the function. It is also surrounded by beautiful gardens‚ the english rose gardens
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if debt carries no market risk 1.5 Cost of Debt rD = rf + Credit Spread 1.6 Cost of Equity CAPM: rE = rf + βE(rm-rf) 1.7 Cost of Capital (WACC) • Capital structure components should be measured on a market value basis‚ not a book value or historic basis • Use a target capital structure rather than the current or historic capital structure • T always means the incremental tax-rate • Debt includes long-term debt‚ financing leases‚ short-term debt‚ operating
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1. (Monthly compounding) If you bought a $1‚000 face value CD that matured in nine months‚ and which was advertised as paying 9% annual interest‚ compounded monthly‚ how much would you receive when you cashed in your CD at maturity? PV 1000 Annual interest Rate 0.09 r 0.0075 n 9 1069.560839 Amount at Maturity: $1‚069.56 2. (Annualizing a monthly
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