a) After determining the company budget, the Executive Finance Director of NDAH Pharmaceutical Corporation can afford...

Transcribed Image Text:

a) After determining the company budget, the Executive Finance Director of NDAH Pharmaceutical Corporation can afford to pay XAF632000 each month towards the purchase of a new car. If the company plans to purchase five new cars for five top company executives, and payments are made at the end of each month for 48 months at an interest rate of 1%, determine the present value sum total? (5 marks) b) An Organisation with a cost of capital of 14% is considering investing in a project costing XAF500 million that will yield cash inflow of XAF100 million per annum continuously for 20years. Assess whether the project should be undertaken. (2mks) c) The market rate of interest for risk free assets is 8%. Stuart promises to pay you XAF150000 in one year in exchange for XAF 125000 now. How much is the promise worth to you? Solve using both the present value and the future value equations. Would you take the offer? Why? (3mks) a) After determining the company budget, the Executive Finance Director of NDAH Pharmaceutical Corporation can afford to pay XAF632000 each month towards the purchase of a new car. If the company plans to purchase five new cars for five top company executives, and payments are made at the end of each month for 48 months at an interest rate of 1%, determine the present value sum total? (5 marks) b) An Organisation with a cost of capital of 14% is considering investing in a project costing XAF500 million that will yield cash inflow of XAF100 million per annum continuously for 20years. Assess whether the project should be undertaken. (2mks) c) The market rate of interest for risk free assets is 8%. Stuart promises to pay you XAF150000 in one year in exchange for XAF 125000 now. How much is the promise worth to you? Solve using both the present value and the future value equations. Would you take the offer? Why? (3mks)