INSTURCTION
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1. Vincent has just won the state lottery, paying GH¢50,000 a year for 20 years. He is to receive his first payment a year from now. The state advertises this as the Million Ghana cedis Lottery because GH¢1,000,000 = GH¢50,000 x 20. If the rate of interest is 8%, what is the true value of the lottery?
2. You are 30 years old today and wish to establish a scholarship fund in your community to help needy but brilliant students. The goal is to provide GH¢200,000 every year even after your death. Your bank promises to pay a rate of interest is 16% per annum for this fund. What amount must you set aside today to achieve the noble goal of the scholarship?
3. The fund established to help in the reduction of a debt and the replacement of obsolete asset is referred to as
4. The stated rate of interest of a bond is known as ....
5. The formal contract between the bondholders and the company that issued the bond is called what?
6. Which of the following is not a determinant of working capital management?
7. Cash management involves three major decision areas. These are:
I) Managing collections and disbursements
II) Determining appropriate cash balances
III) Investing in idle cash
8. In credit assessment, the customer's ability to pay is known as
9. What do we use this formular for?
(E/V)Ke + (P/V)Kp + (D/V)Kd (1-Tc)
10. In basic credit terms, what does CIA stand for?
Statement 1:
A higher discount rate will lead to a lower value for cash flows in the future.
Statement 2:
Compounding converts present cash flows into future cash flows.
12. The interest earned only on the original investment is known as what?
13. Melody has GHS1,000 to invest for 2 Years at an annual interest rate of
12%, supposed interest is compounded monthly, what is the interest on the GHS1,000?
14. PESK. Limited is an investment company in Ghana. The company invested GH¢250,000,000 in January 2022 into a Fixed Deposit Account earning 6% interest. In which year will PESK Limited's investment double?
15. The equal-payment of house mortgage or instalment credit agreement is example of which type of annuity?
16. Your company issued a bond with 10 years maturity. Annual coupon is GH¢80. Similar bonds have a yield of maturity of 8%. What is the value of this bond?
17. A company pays a constant dividend of GH¢100 per share. If the market capitalization rate is 25%, how much will you pay for a share of the company today?
18. The process of planning and managing a firm's long-term investment is known as ....
19. At which stage of the capital budgeting process do we examined the survived proposal, cash flows, risk, demand, cost of capital and timing of the investment and the personnel involved in the project?
20. Which of the capital investment appraisal method is referred to as back of the envelop calculation?
