FINANCIAL MANAGEMENT (HCM-213)
ASSIGNMENT 2
Total of 10 Marks
Last Date for Submission 04/04/2018
Q1: Al Amal Hospital is expecting its new center to generate the following cash flows:
|
Years |
0 |
1 |
2 |
3 |
4 |
5 |
|
Initial investment |
($30,000,000) |
|
|
|
|
|
|
Net operating cash flows |
|
$6,000,000 |
$8,000,000 |
$16,000,000 |
$20,000,000 |
$30,000,000 |
a. Determine the payback for this new center.
b. Determine the net present value using a cost of capital of 15 percent. Should the project be accepted?
Q2. Assume a zero coupon Bond with a $1000 Par Value and 15-year maturity, calculate its rate of return if the market price equal $315.240.
Q3. A tax exempt bond was issued at a 10% coupon bond and a maturity of 15 years. The Par Value of the bond is $1000.
At what required market rate (10%, 5% or 14%) does the above bond sell at a discount? At a premium?
