THE
Question 1
CIBC Bank
Amount $2000,000 x 0.90 = 1800,000
Interest = 8%
Periods = 12 x 3 = 36
Paymnets = 0.08/12 = 0.00666667
Equation
PVA = PMT 1 - 1
i i (1 + i )n
1800000 = 1 - 1
0.00666667 0.00666667 (1 + 0.00666667)36
1800000 = 1 - 1
0.00666667 0.00666667 (1.006666667)36
1800000 = 1 - 1
0.00666667 0.00666667 ( 1.270237203)
1800000 = 1 - 1
0.00666667 1.270237203
1800000 = 149.999925 - 118.0881213727431
= 31.9118
PMT = 1800000/31.9118 = $56405.46
|
Months
|
Opening Balance |
Payment
|
Interest
|
Repayment of Principal |
Closing Balance |
|
|
|
PV = PMT x PVIFAk,n |
|
PMT - INTEREST |
O/BAL - ROP |
|
1 |
1800000 |
($56,405.46) |
12000 |
($68,405.46) |
$1,731,594.54 |
|
2 |
$1,731,594.54 |
($56,405.46) |
11543.96361 |
($67,949.42) |
$1,663,645.12 |
|
3 |
$1,663,645.12 |
($56,405.46) |
11090.96747 |
($67,496.43) |
$1,596,148.70 |
|
4 |
$1,596,148.70 |
($56,405.46) |
10640.9913 |
($67,046.45) |
$1,529,102.25 |
|
5 |
$1,529,102.25 |
($56,405.46) |
10194.01498 |
($66,599.47) |
$1,462,502.77 |
|
6 |
$1,462,502.77 |
($56,405.46) |
9750.01849 |
($66,155.48) |
$1,396,347.30 |
|
7 |
$1,396,347.30 |
($56,405.46) |
9308.981981 |
($65,714.44) |
$1,330,632.86 |
|
8 |
$1,330,632.86 |
($56,405.46) |
8870.885716 |
($65,276.34) |
$1,265,356.51 |
|
9 |
$1,265,356.51 |
($56,405.46) |
8435.710092 |
($64,841.17) |
$1,200,515.35 |
|
10 |
$1,200,515.35 |
($56,405.46) |
8003.435639 |
($64,408.89) |
$1,136,106.45 |
|
11 |
$1,136,106.45 |
($56,405.46) |
7574.043016 |
($63,979.50) |
$1,072,126.95 |
|
12 |
$1,072,126.95 |
($56,405.46) |
7147.51301 |
($63,552.97) |
$1,008,573.98 |
|
13 |
$1,008,573.98 |
($56,405.46) |
6723.826538 |
($63,129.28) |
$945,444.70 |
|
14 |
$945,444.70 |
($56,405.46) |
6302.964642 |
($62,708.42) |
$882,736.27 |
|
15 |
$882,736.27 |
($56,405.46) |
5884.908493 |
($62,290.37) |
$820,445.91 |
|
16 |
$820,445.91 |
($56,405.46) |
5469.639384 |
($61,875.10) |
$758,570.81 |
|
17 |
$758,570.81 |
($56,405.46) |
5057.138736 |
($61,462.60) |
$697,108.21 |
|
18 |
$697,108.21 |
($56,405.46) |
4647.388092 |
($61,052.85) |
$636,055.37 |
|
18 |
$636,055.37 |
($56,405.46) |
4240.369119 |
($60,645.83) |
$575,409.54 |
|
20 |
$575,409.54 |
($56,405.46) |
3836.063606 |
($60,241.52) |
$515,168.02 |
|
21 |
$515,168.02 |
($56,405.46) |
3434.453463 |
($59,839.91) |
$455,328.11 |
|
22 |
$455,328.11 |
($56,405.46) |
3035.520721 |
($59,440.98) |
$395,887.13 |
|
23 |
$395,887.13 |
($56,405.46) |
2639.247531 |
($59,044.71) |
$336,842.42 |
|
24 |
$336,842.42 |
($56,405.46) |
2245.616162 |
($58,651.07) |
$278,191.35 |
|
25 |
$278,191.35 |
($56,405.46) |
1854.609002 |
($58,260.07) |
$219,931.28 |
|
26 |
$219,931.28 |
($56,405.46) |
1466.208556 |
($57,871.67) |
$162,059.62 |
|
27 |
$162,059.62 |
($56,405.46) |
1080.397447 |
($57,485.86) |
$104,573.76 |
|
28 |
$104,573.76 |
($56,405.46) |
697.1584118 |
($57,102.62) |
$47,471.15 |
|
29 |
$47,471.15 |
($56,405.46) |
316.4743035 |
($56,721.93) |
($9,250.79) |
|
30 |
($9,250.79) |
($56,405.46) |
-61.67191068 |
($56,343.79) |
($65,594.57) |
|
31 |
($65,594.57) |
($56,405.46) |
-437.2971501 |
($55,968.16) |
($121,562.73) |
|
32 |
($121,562.73) |
($56,405.46) |
-810.4182213 |
($55,595.04) |
($177,157.77) |
|
33 |
($177,157.77) |
($56,405.46) |
-1181.051819 |
($55,224.41) |
($232,382.18) |
|
34 |
($232,382.18) |
($56,405.46) |
-1549.214525 |
($54,856.24) |
($287,238.42) |
|
35 |
($287,238.42) |
($56,405.46) |
-1914.922814 |
($54,490.54) |
($341,728.96) |
|
36 |
($341,728.96) |
($56,405.46) |
-2278.193048 |
($54,127.26) |
($395,856.22) |
Scotia Bank
Loan Amount $2000,000
Interest = 12%
Periods = 12 x 3 = 36
Paymnets = 0.12/12 = 0.01
Equation
PVA = PMT 1 - 1
i i (1 + i )n
2000000 = 1 - 1
0.01 0.01 (1 + 0.01)36
2000000 = 1 - 1
0.01 0.01 (1.01)
2000000 = 1 - 1
0.01 0.001 ( 1.430768783591581)
2000000 = 1 - 1
0.01 0.014307687835916
2000000 = 100 - 69.89249496272495
= 30.1075
PMT = 2000000/30.1075 = $66428.62
|
Months
|
Opening Balance |
Payment
|
Interest
|
Repayment of Principal |
Closing Balance |
|
|
|
PV = PMT x PVIFAk,n |
|
PMT - INTEREST |
O/BAL - ROP |
|
1 |
2000000 |
($66,428.62) |
20000 |
($86,428.62) |
$1,913,571.38 |
|
2 |
$1,913,571.38 |
($66,428.62) |
19135.7138 |
($85,564.33) |
$1,828,007.05 |
|
3 |
$1,828,007.05 |
($66,428.62) |
18280.07047 |
($84,708.69) |
$1,743,298.36 |
|
4 |
$1,743,298.36 |
($66,428.62) |
17432.98357 |
($83,861.60) |
$1,659,436.75 |
|
5 |
$1,659,436.75 |
($66,428.62) |
16594.36754 |
($83,022.99) |
$1,576,413.77 |
|
6 |
$1,576,413.77 |
($66,428.62) |
15764.13766 |
($82,192.76) |
$1,494,221.01 |
|
7 |
$1,494,221.01 |
($66,428.62) |
14942.21009 |
($81,370.83) |
$1,412,850.18 |
|
8 |
$1,412,850.18 |
($66,428.62) |
14128.50179 |
($80,557.12) |
$1,332,293.06 |
|
9 |
$1,332,293.06 |
($66,428.62) |
13322.93058 |
($79,751.55) |
$1,252,541.51 |
|
10 |
$1,252,541.51 |
($66,428.62) |
12525.41508 |
($78,954.03) |
$1,173,587.47 |
|
11 |
$1,173,587.47 |
($66,428.62) |
11735.87473 |
($78,164.49) |
$1,095,422.98 |
|
12 |
$1,095,422.98 |
($66,428.62) |
10954.22979 |
($77,382.85) |
$1,018,040.13 |
|
13 |
$1,018,040.13 |
($66,428.62) |
10180.40129 |
($76,609.02) |
$941,431.11 |
|
14 |
$941,431.11 |
($66,428.62) |
9414.311085 |
($75,842.93) |
$865,588.18 |
|
15 |
$865,588.18 |
($66,428.62) |
8655.881778 |
($75,084.50) |
$790,503.68 |
|
16 |
$790,503.68 |
($66,428.62) |
7905.036763 |
($74,333.66) |
$716,170.02 |
|
17 |
$716,170.02 |
($66,428.62) |
7161.7002 |
($73,590.32) |
$642,579.70 |
|
18 |
$642,579.70 |
($66,428.62) |
6425.797001 |
($72,854.42) |
$569,725.28 |
|
19 |
$569,725.28 |
($66,428.62) |
5697.252835 |
($72,125.87) |
$497,599.41 |
|
20 |
$497,599.41 |
($66,428.62) |
4975.99411 |
($71,404.61) |
$426,194.80 |
|
21 |
$426,194.80 |
($66,428.62) |
4261.947973 |
($70,690.57) |
$355,504.23 |
|
22 |
$355,504.23 |
($66,428.62) |
3555.042297 |
($69,983.66) |
$285,520.57 |
|
23 |
$285,520.57 |
($66,428.62) |
2855.205678 |
($69,283.83) |
$216,236.74 |
|
24 |
$216,236.74 |
($66,428.62) |
2162.367425 |
($68,590.99) |
$147,645.76 |
|
25 |
$147,645.76 |
($66,428.62) |
1476.457554 |
($67,905.08) |
$79,740.68 |
|
26 |
$79,740.68 |
($66,428.62) |
797.4067826 |
($67,226.03) |
$12,514.65 |
|
27 |
$12,514.65 |
($66,428.62) |
125.1465185 |
($66,553.77) |
($54,039.11) |
|
28 |
($54,039.11) |
($66,428.62) |
-540.391143 |
($65,888.23) |
($119,927.34) |
|
29 |
($119,927.34) |
($66,428.62) |
-1199.273428 |
($65,229.35) |
($185,156.69) |
|
30 |
($185,156.69) |
($66,428.62) |
-1851.56689 |
($64,577.05) |
($249,733.74) |
|
31 |
($249,733.74) |
($66,428.62) |
-2497.337417 |
($63,931.28) |
($313,665.02) |
|
32 |
($313,665.02) |
($66,428.62) |
-3136.650239 |
($63,291.97) |
($376,956.99) |
|
33 |
($376,956.99) |
($66,428.62) |
-3769.569933 |
($62,659.05) |
($439,616.04) |
|
34 |
($439,616.04) |
($66,428.62) |
-4396.16043 |
($62,032.46) |
($501,648.50) |
|
35 |
($501,648.50) |
($66,428.62) |
-5016.485022 |
($61,412.13) |
($563,060.64) |
|
36 |
($563,060.64) |
($66,428.62) |
-5630.606368 |
($60,798.01) |
($623,858.65) |
Advice purchase using scotia Bank it is the best because you will pay less as compared to CIBC bank, which on top of the interest you will also add 200,000 to purchase the vehicle.
C. The Effective rate
EAR = (1 + inom)m -1
EAR = (1 + 0.30/12)12 – 1
EAR = (1 + 0.025)12 – 1
EAR = 1.02512 – 1
EAR = 1.344 – 1
EAR = 0.344 or 34%
D. The outstanding for two month
= 56,405.46 x 2
= 112,810.92
Interest =0.344 /12 = 2.83%
0.0283 x 112,810.92
= 3192.55
Totals =112,810.92 + 3192.55
=116003.47
Section B
QUESTION THREE
A. Payback period
Health
|
Year |
CashFlow |
Balance |
|
0 |
-24,500,000 |
-24,500,000 |
|
1 |
7,000,000 |
17,500,000 |
|
2 |
5500000 |
12,000,000 |
|
3 |
8750000 |
3,250,000 |
|
4 |
6500000 |
|
Year of recovery + (balance/ the subsequent year)
=3+(3250000/6500000)
=3.5 years
Education
|
Year |
CashFlow |
Balance |
|
0 |
-29,250,000 |
-29,250,000 |
|
1 |
10,500,000 |
18,750,000 |
|
2 |
7750000 |
11,000,000 |
|
3 |
10,250,000 |
750,000 |
|
4 |
12000000 |
|
Year of recovery + (balance/ the subsequent year)
=3+ (750000/12000000)
=3.0625 years
It would be best to accept the Education project because it has a shorter payback period.
B. Net Present Value
Health
|
Year |
Cash flow |
PVIF = 7 |
PV |
|
0 |
-24.5 |
|
|
|
1 |
7 |
0.9346 |
6.5422 |
|
2 |
5.5 |
0.8734 |
4.8037 |
|
3 |
8.75 |
0.163 |
7.1426 |
|
4 |
6.5 |
0.7629 |
4.9589 |
|
|
23.4474 |
||
|
|
24.5 |
||
|
|
-1.0526 |
NPV=-6.5422+4.8037+7.1426+4.9589 = 23.4474 – 24.5
= -1.0526 Not accepted
Education
|
Year |
Cash flow |
PVIF |
PV |
|
|
-29.25 |
|
|
|
1 |
10.5 |
0.9174 |
9.6327 |
|
2 |
7.75 |
0.8417 |
6.5232 |
|
3 |
10.25 |
0.7722 |
7.9151 |
|
4 |
12 |
0.7084 |
8.5008 |
|
|
32.5718 |
||
|
29.25 |
|||
|
3.3218 |
NPV= 9.6327+6.5232+7.9151+8.50
= 3.31 accept
It would be best to accept the Education project because it has a positive NPV.
C. Profitability index
Health
Profitability index
PI= -23.4474/24.5 x 100
= 95.70
Education
Profitability index
PI= 32.5718/29.25 x 100
= 1.11%
D. The government should implement the project of education as it has proved worthwhile with positive net present value and profitability index. It also provides a relatively lower payback period as compared to the health project.
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Question 1
A. Future value of vacation Investment FV = PV(1+R)n FV = 2400(1.12)2 FV = 2400(1.2544) FV = 3010.56 Ken will not succeed the investment has little future value. The Amount Ken need to succeed FV=PV*(1+R)n =30,000=PV(1.12)2 =30000=PV(1.12544) PV=30,000/1.12544 PV= 26,656.2411 Ken need to invest =26,656.2411/24 =1110.68 per month The amount he need to reach the goal of purchasing a car FV=PV*(1+R)2 =250,000=PV(1.12)2 =250,000=PV1.7623 PV=250,000/1.7623 PV= 141856.71 Ken need to invest =141856.71/60 =2364.28 per month
The cash flow of investment
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SECTION B
A. Year 1 g=10% Year 2 g=10% Year 3 g=8% Year 4 g=6% DO =2.50 K = 12%
AP3 = D4 (KS – g)
0.12 – 0.06 AP3 = 3.46302 0.06 AP3 = 57.72
B. YTM= (C+(PV-MV) ÷n) ∕(PV+MV÷2)) (1-T)100 Yield to maturity=8% par value of the bond =$1,000 coupon rate 6% semi annual years of maturity= 25 years since it is a semi-annually paid bond; divide yield maturity by 2(R/2) divide the coupon rate by 2(C/2) multiply the maturity by 2(r ×2)
0.04=c+(1,000-985)/50(1000+985/2) (1-T)100 0.04=(C+0.3) ÷ (992.5) 39.7= C+0.03 C=39.67
0.06÷2=0.03 3/100×1000 30 Due to risk the yield to maturity return is 12%, therefore 0.06=(C+0.3) ÷ (992.5) 59.55=C+0.3) C=59.25 The stock trades at 49.75$ therefore it has been under valued
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Version 1.0 Page 1 of 14 Issue Date:
CCCJ-OCD/Business Administration/v 1.0 Page 11 of 14
2020-April-20
2020-May-04
|
Communication Channel and Context Matrices COMM/400 Version 7 |
1 |
University of Phoenix Material
Communication Channel and Context Matrices
Part I – Communication Channel Matrix
Fill in descriptions of the characteristics and examples, pros, cons, and recommended etiquette of each communication channel.
|
Characteristics and examples |
Pros |
Cons |
Etiquette for managers and staff |
|
|
Personal E-Mail |
|
|
|
|
|
Company-Wide E-Mail |
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Phone Call |
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Teleconference |
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Virtual Meeting or Web Conference |
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Face-to-Face Meeting |
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Part II – Communication Context Matrix
Recommend and provide justification for the appropriate communication channel you would use in the following contexts. In your 3- to 5-sentence justification, explain whether the channels may vary according to company size or culture.
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Situation
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Recommended Channel (specify the type of intrapersonal, interpersonal, public, mass, or computer-mediated context channel) |
Justification |
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Publicizing a change in employee benefits |
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Handling a conflict situation between virtual teams |
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Handing a conflict situation between a manager and an employee |
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Detailing a new procedure to a small number of employees |
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Training a team on a new software program |
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Explaining a new process to the company |
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Announcing promotions |
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Announcing the termination of a dangerous employee |
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Announcing a major reorganization |
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Announcing a major layoff cycle |
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Add References Below of sources used.
References:
Copyright © 2018, 2016, 2010 by University of Phoenix. All rights reserved.
ACCT3402
20/12 The Council of Community Colleges of Jamaica Page 1
THE COUNCIL OF COMMUNITY COLLEGES OF JAMAICA
BACHELOR OF SCIENCE EXAMINATION
SEMESTER I – 2020 DECEMBER
PROGRAMME: BUSINESS ADMINISTRATION
COURSE NAME: FINANCIAL MANAGEMENT I
CODE : ACCT3402
YEAR GROUP: THREE
DATE ADMINISTERED: THURSDAY, 2020 DECEMBER 16
DURATION: 72 HOURS
ASSESSMENT TYPE: FINAL
This Assessment has 5 pages
INSTRUCTIONS:
1. ANSWER ALL QUESTIONS FROM SECTION A
2. SECTION B CONSISTS OF THREE (3) QUESTIONS. ANSWER ANY TWO (2)
3. ATTACH THE SIGNED CCCJ ASSIGNMENT COVERSHEET TO THE FRONT
OF YOUR ASSIGNMENT BEFORE SUBMITTING
4. ATTACH THE TURNITIN RECEIPT TO YOUR ASSIGNMENT BEFORE
SUBMITTING
NOTE: YOUR ASSIGNMENT WILL NOT BE ACCEPTED IF 3. AND 4. ABOVE IS
NOT ATTACHED
YOUR COMPLETED WORK MUST BE SUBMITTED WITHIN THE SPECIFIED
DURATION OUTLINED ABOVE TO PREVENT PENALTIES
ACCT3402
20/12 The Council of Community Colleges of Jamaica Page 2
SECTION A
Instruction: Complete ALL questions from this section.
Joanna is a civil servant who recently got a job promotion and decided to purchase a car through
the bank valued at $2 million. She currently earns a monthly salary of $250,000 and wants to
keep her monthly payment at below 25% of her salary due to budgetary constraints. She made
inquiries with two banks who gave her the following information over the phone.
CIBC offered her 90% financing with three years to repay at 8% compounded monthly.
Scotiabank offered 100% financing based on her civil service membership with three years to
repay at 12% compounded monthly. Payments would become due at the end of each month.
Joana sought your assistance as a Finance student to help her understand the terms of the offer so
that she can make her decision.
A. Prepare the amortization schedules for both loans. (12 marks)
B. Which company would be best for Joanna to accept the loan from based on her constraints and why? (2 marks)
Three months into the loan Joanna accepted a line of credit (like a credit card) with a $650,000
limit from her bank. There is no interest payment if the line of credit is not used. However, the
bank charges 30% interest compounded monthly on any outstanding balance.
The impact of covid-19 caused Joanna to lose her income temporarily for two months. She was
unable to make her monthly payments. Joanna decided to borrow from her line of credit so that
she does not default on her loan. A month later she is back at work and is hoping to settle the
outstanding sum.
C. Advise her what would be the Effective Rate of Interest (EAR) on the credit line? (2 marks)
D. Recommend to Joanna the amount outstanding for the two months, including the interest for the credit line if she had gotten the loan from CIBC. (4 marks)
(Total 20 marks)
END OF SECTION A
ACCT3402
20/12 The Council of Community Colleges of Jamaica Page 3
SECTION B
Instruction: Complete any TWO (2) questions from this section.
Question 1
Ken, the Director of Finance in a prominent hotel has been planning a $30,000 extravagant
vacation this year to mark his 10th year of wedded anniversary. He has been investing $1,000
into an investment fund at the end of each month at a rate of 12% for the past two years.
The impact of covid-19 derailed his plans somewhat as he was made redundant from his job after
being with the company for 35 years. His severance package was a hefty sum but the uncertainty
surrounding the pace of economic recovery made Ken thought wisely about his future financial
stabililty.
Ken needed a new car but despite his current access to cash he decides to buy the car in five
years time, opting to make an investment now at 12 percent with the hope of amassing $250,000
then.
He is also of the opinion that given the rampage of covid-19 and its potential medium-to-long-
term effect, an investment that provides regular cashflow would help in the interim. He
purchased an investment at 6% that will give him $1,000 at each of the next three years, $2,000
at the end of year 4, $3,000 at the end of year 5 and $5,000 at the end of year 6.
As his financial guru buddy, he asked you to help him assess his financial position guided by the
questions or statement below.
A. Despite Ken’s redundancy, would he have succeeded with his vacation investment? (4 marks)
B. How much should Ken have invested monthly to have realized his goal? (3 marks)
C. What would be a reasonable sum for Ken to invest now so that he can reach his goal of buying the car? (3 marks)
D. What is the total cashflow of the investment and how much is it worth today? (10 marks)
(Total 20 marks)
(To be prorated to 30 marks)
ACCT3402
20/12 The Council of Community Colleges of Jamaica Page 4
Question 2
Levi Company Ltd has been experiencing a period of rapid growth. Dividends are expected to
grow at a rate of 10% during the next 2 years, at 8% in the third year and at a constant rate of 6%
thereafter. Their last dividend was $2.50 and the required rate on the company’s stock is 12%.
The stock currently trades for $49.75 per share on the stock exchange.
In January 2020, the company’s investment grade bond of $20 million at $1,000 par, had 25
years to mature, with a semiannual coupon rate of 6% and a yield to maturity of 8%.
The company has been hit hard by the impact of covid-19. General interest rate have declined
from governments’ monetary response to economic stability. The company also suffered a
downgrade from Moody’s Bond Rating Agency to a Baa3. Bonds with similar risk, return a 12%
yield to maturity, given the increased level of risk.
Prior to covid-19 these options appeared to be very attractive investment options for your client
but now he wants to get an update on the performance of his portfolio. As his investment
advisor, assess your clients investment portfolio to ascertian the potential of realizing a loss.
A. Determine the current market value of the company’s stock. (10 marks)
B. How much is the change in the value of the bond after the downgrade? (6 marks)
C. How would you summarize your client’s current investments? (4 marks)
(Total 20 marks)
(To be prorated to 30 marks)
ACCT3402
20/12 The Council of Community Colleges of Jamaica Page 5
Question 3
Amidst several project postponements due to the financial fallout associated with covid-19, the
government must proceed with critical infrastructural development especially in the areas of
health and education. Consistent with procurement guidelines, the Project Management Team
has solicited quotations on two mutually exclusive projects in Health and Education.
The project at the Health Ministry is estimated to cost $24.5 million and The Education Project’s
quotation is valued at $29.25 million. The government predicts that the nominal cost of capital
for health is 7 percent and 9 percent for education.
The cashflows associated with both projects over a four-year period is as follows:
Year Health (in millions) Education (in millions)
1 7 10.5
2 5.5 7.75
3 8.75 10.25
4 6.5 12
Provide the team with the best project to implement based on the following criteria:
A. Payback period (5 marks)
B. Net Present Value (10 marks)
C. Profitability Index (3 marks)
D. Recommend the most viable project for implementation (2 marks)
(Total 20 marks)
(To be prorated to 30 marks)
END OF ASSESSMENT
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