FINANCIAL MANAGEMENT ASSIGNMENT

1. FV= A(1 + i)n

= 2,500(1.07)6

= Br. 3,751.83

2. Given

 Interest 13% compounded monthly

 Period = n= 6 * 12 = 72
 FV= Br. 50,000
 I= 0.13/12 = 0.01083333

FV = A[(1+i)n – 1]
I
A[(1.01083333)72 – 1]
50,000 = 0.01083333
A= 50,000/108.21606814

= Br. 462.04

3. Given

January 1, 1990 – January 1, 1999

December 31, 2003= ?

I = compounded annually 10%

A= 3,000

1st FV of ordinary annuity for 9 years

FVoa = A[(1+i)n – 1]
I
= 3,000[(1.1)9 – 1]
0.1
= 40,738
2 FVof single sum for 5 periods
nd

FV = (1 +i)n

= 40,738(1.1)5
= Br. 65,608.96

4. a. FV = 2,000(1.1)5 = Br. 8,052.55

b. FV = 4,000(1.1)4 = Br. 5,856.4

c. FV = 5,000(1.1)3 = Br. 6,655

d. FV = 2,200(1.1)2 = Br. 2,662

e. FV = 1,900(1.1)1 = Br. 2,090

5. Present value of a single sum

PV single sum = FV
(1 + i)n
Br. 50,000
(1.11)5
= Br. 29, 672.57
6. Given
 Debt retirement December 31, 2010
 FV = Br. 50,000
 Initial deposit Br. 100,000
 Wants to deposit equal payment starting from January 1, 2005 – January 1, 2010
 Interest = 6%
1st Determine the future value of a single sum of Br. 100,000
FV = A( 1+ i)n
=100,000 (1.06)7
= Br. 150,363
 Of the total amount required Br. 500,000 at the beginning of January 1,2010 Br.
150,363 is secured
 Then the remaining amount Br. 349,637 (500,000 – 150,363) is calculated as follows
FVoa = A[ (1 + i)n – 1)]
i
349,637 = A[ (1.06)5 – 1)]
0.06
A= 349,637/5.63709296
= Br. 62,024.35
7. Given
 Periodic payment Br. 45,000
 N = 10 years
 Interest 12%
PVoa = A[ ( 1- 1/1 +i)n]
 I
= 45,000[ 1- 1/)1.12)10
0.12
= Br. 254,260

8. PVad = A[ ( 1- 1/1 +i)n] * (1 + i)

i
= 5,000[ 1- 1/)1.12)10] x 1.08
0.08
= Br. 36,234.44

9. PVad = A[ ( 1- 1/1 +i)n] * (1 + i)

i
= 5,000[ 1- 1/)1.12)6] x 1.08
0.08
= Br. 24,963.55

10. In this question even though it is required to find the present value, there is no data given.

11. Present value perpetuity is given by

= Amount
I
= 7,000_
0.07
= Br. 100,000
12. Present value of a single sum
FV single sum = A (1 +i)n
A = __FV_
(1 +i)n
= _10,000_
(1.08)5
= Br. 6,805.83
13. ROA = ROI = Profit margin x TATR
= 4% x 1.5
= 6%
ROE = ROA(ROI)_____
( 1 – Debt/Asset)

= 6%___
(1 – 0.4)
= 0.1 =10%
14. Profit margin = Net income
Sales
= 3,900___
196,200
= 0.01988 = 1.988%
 It implies for each 1 br. of firms sales it is capable of generating a net profit of br.
0.01988 and the larger is the better.
15. a. Project C is desirable. Because more or less project C provides uniform cash flows as
compared to project D. In addition the present value of project C is greater than project D.
b. Project D is more riskier