19 Jul DISCUSS THE MAJOR FUNCTIONS PERFORMED BY FINANCIAL INTERMEDIARIES IN AN ECONOMY
QUESTION ONE
a) Cash flows are considered to be more important than accounting profits in making an investment decision, explain why this is the case (5 Marks)
b) Discuss the major functions performed by financial intermediaries in an economy (5 Marks)
c) A company is considering the launch of a new product called Zed which requires an investment of Ksh 6,000,000 in plant and machinery. The production of Zed is expected to last for five years after which the plant and machinery would be sold for Sh. 1,500,000. In additional information:
i) Zed would be sold at Shs.6oo per unit with a variable cost of Shs.210 per unit
ii) Fixed production costs (excluding depreciation) would amount to Shs.600,000 per annum
iii) The company applies straight line method of depreciation
iv) The cost of capital is 10% per annum
v) The company expects to Sell 8,000, 7,000, 7,000, 5,000 and 3,000 units of Zed in the first, second, third, fourth and fifth year of production, respectively
vi) The corporation tax rate is 30%
Required:
Calculate the net present value (NPV) of the project and advice the management on appropriate course of action. (15 Marks)
QUESTION TWO
a) In a contemporary economy ethical responsibility isn’t a legal requirement but a moral imperative for companies to operate in an ethical and fair manner. State and explain the main ways in which the ethical responsibility of a company can be discharged. (12 Marks)
b) Pentex Limited Company intends to raise funds to finance its operations and the proposed investments, as a finance advisor explain to the management of the company factors that will influence their decisions on sources of funds. (13 Marks)
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.