Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Scribd Logo
Upload

Welcome to Scribd!

  • 18 views

    AGBM 412 NOVCAT ANS 2023docx

    Uploaded by

    kipkuruiseth
    cat paper

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    AGBM 412 NOVCAT ANS 2023docx

    Uploaded by

    kipkuruiseth
    18 views3 pages
    cat paper

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    cat paper

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    18 views3 pages

    AGBM 412 NOVCAT ANS 2023docx

    Uploaded by

    kipkuruiseth
    cat paper

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    You are on page 1of 3

    AGBM 412 FINANCIAL MANAGEMENT CAT

    a) Compute the expected cash flow in each year (9 MARKS)

    Period
    months ( ) ( ) ( )
    2.4 52,000 0.1 5,200 20,000 0.1 2,000 -40,000 0.1 -4,000
    4.8 65,000 0.2 13,000 46,000 0.25 11,500 32,000 0.3 9,600
    7.2 74,000 0.4 29,600 68,000 0.3 20,400 58,000 0.3 17,400
    9.6 89,000 0.2 17,800 80,000 0.25 20,000 85,000 0.2 17,000
    12 90,000 0.1 9,000 100,000 0.1 10,000 140,000 0.1 14,000
    74,600 63,900 54,000

    ( ), ∑ ( )
    b) Calculate the expected NPV of the total expected cash flow [Discount
    rate=14%(4dp)] (6 MARKS)

    Year
    1 74,600 0.8772 65,439.12
    2 63,900 0.7695 49,171.05
    3 54,000 0.675 3,6450
    151,060.17
    125,000.00
    ( ) 26,060.17

    ( )
    , ( ) ∑

    c) Compute the standard deviation of the expected cash flow in each year (2dp)
    (12 MARKS)

    ( ) ( ) ( ) ( )
    52,000 -22,600 510,760,000 0.1 51,076,000
    65,000 -9,600 92,160,000 0.2 18,432,000
    74,000 -600 360,000 0.4 144,000
    89,000 14,400 207,360,000 0.2 41,472,000
    90,000 15,400 237,160,000 0.1 23,716,000
    134,840,000

    √∑( ) ( ) √

    “Transforming Lives Through Quality Education” Page 1


    AGBM 412 FINANCIAL MANAGEMENT CAT

    ( ) ( ) ( ) ( )
    20,000 -43,900 1,927,210,000 0.1 192,721,000
    46,000 -17,900 320,410,000 0.25 80,102,500
    68,000 4,100 16,810,000 0.3 5,043,000
    80,000 16,100 259,210,000 0.25 64,802,500
    100,000 36,100 1,303,210,000 0.1 130,321,000
    472,990,000

    √∑( ) ( ) √

    ( ) ( ) ( ) ( )
    -40,000 -94,000 8,836,000,000 0.1 883,600,000
    32,000 -22,000 484,000,000 0.3 145,200,000
    58,000 4,000 16,000,000 0.3 4,800,000
    85,000 31,000 961,000,000 0.2 192,200,000
    140,000 86,000 7,396,000,000 0.1 739,600,000
    1,965,400,000

    √∑( ) ( ) √

    d) Which year is more risky for the entrepreneur? Why? Prove. (2dp) (3 MARKS)

    Year 3 is more risky since the CV is the highest at 82.1%

    “Transforming Lives Through Quality Education” Page 2


    AGBM 412 FINANCIAL MANAGEMENT CAT

    e) Compute the ( ( )) if (3 MARKS)

    ( ) ( )
    ( ( )) √∑
    ( )

    √
    ( ) ( ) ( )

    [NB: State ( ) to 5dp]

    2. Agency problems in financial management misalign shareholders’ and managers’


    objectives. Enumerate incentive and monitoring strategies used by CEOs to mitigate
    agency problems (7 MARKS)
    Incentive strategies
    a. stock options
    b. bonuses
    c. Perquisites (car, house medical insurance, education etc.)
    Monitoring strategies
    i. bonding,
    ii. review of perquisites,
    iii. auditing financial statements,
    iv. limiting management decisions

    *************************************************************************************

    “Transforming Lives Through Quality Education” Page 3

    You might also like