Interest Rate & Financial Management - Accounting Assignment Help

Assignment Task

QUESTION 
Martha wants to buy a car for R250 000. The bank has quoted her an interest rate of 12 percent per annum (compounded monthly). If she wishes to repay the loan over 60 months, calculate her monthly installment.
R4 670
R5 485
R5 5 61
R6 666
R5 842(1)

Sibusiso requires a minimum return of 15 percent per annum on all investments. Determine the maximum he should pay to purchase an annuity of R15 000 per year for 15 years.
R90 225
R91 099
R82 096
R85 890
R87 711(1)
3. Calculate the present value (PV) of the following mixed stream of cash flows if the required discount rate is 10% per annum. YearCash flow
R600
R800
R600
R1 400
R2 614
R2 474
R2 395
R2 019
R1 750(1)
.4. Puseletso can set aside R10 000 today for pocket money when travelling to China in five years’ time. If the annual interest rate is 6% per annum compounded monthly, how much will Puseletso be able to spend?
R14 154
R13 735
R13 564
R13 489
R13 382(1)
5. Calculate the nominal (annual percentage rate) interest rate if the effective interest rate earned on an investment is 16.08% per annum but interest is calculated at the end of each month.
13,3 %
15,0 %
14,9 %
15,4 %
18,7 % (1)
6. Assume you invest R2 000 annually (at the end of each year) for 11 successive years in a savings account at 11% per annum (compounded per year). At the end of the 11th year you withdraw R11 000 and the balance is invested at 11% per annum for 6 more years. What will be the end value of the investment?
R55 667
R49 543
R51 148
R56 105
R52 602. (1)
7. Assume you buy a house for R1 000 000 and obtain an 95% mortgage bond. You plan to repay the home loan by means of monthly payments over the next 25 years. You manage to negotiate a fixed interest rate of 12% per annum, calculated monthly. What will your monthly payment be?
R10 594
R9 910
R10 006
R8 809
R12 912 (1)
8. The following information is known:
Net cash flow = R4 000 per year
Useful life = 5 years
Cost of capital = 10%
Initial investment = R10 000
Calculate the internal rate of return (IRR) of the project.
25,2 %
28,6 %
30,0 %
22,5 % (1)
The internal rate of return (IRR) of a project with a net present value (NPV) of
R1 000 and a cost of capital of 13% will be:
greater than 13%
smaller than 13%
exactly equal to 13% (1)
10. The following information is given for project X with an initial investment of R500. The cost of capital is 10%.
Year Net cash flow
1 R110
2 R145
3 R160
4 R170
5 R177
Which one of the following statements is correct?
The net present value (NPV) for project X is negative;
The internal rate of return (IRR) for project X is smaller than 10%;
The payback period for project X is 3,5 years. (1)
USE THE INFORMATION BELOW TO ANSWER QUESTIONS 11 TO 13
Kelebogile Limited wants to purchase a machine for R3.8 million. Installation costs will be R200 000. The machine will enable savings in operating costs of R2 million per year for four years. Wear and tear will be allowed at 25% per year and the machine will be sold for R240 000 at the end of the useful life of 4 years. The firm’s tax rate is 30% and its cost of capital is 20%.
11. Calculate the initial investment of the project.
(a) R4.4 million
(b) R4.0 million
(c) R4.2 million
(d) R3.8 million 
12. Calculate the annual net operating cash flow of the project in year 4.
R1 700 000
R1 868 000
R1 940 000
R1 540 000

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