PART A (15 Marks) Question 1 Al. a Evaluate the following statement: 'Managers should not focus on the current share value because doing so will lead to an overemphasis on short-term profits at the expense of long-term profits. (3 Marks) A1. b A local bank is offering 4.75 per cent compounded daily on savings accounts. If you deposit $2,000 today, how much will you have in two years? How much will you have in four years? (3 Marks) A1. c What is the relationship between changes in interest rates and bond values? How is this relationship affected by the time to maturity? By the coupon rate? (3 Marks) A1.d What is the present value of a $1000 annual perpetuity at the end of each year, discounted back to the present at 8%? (3 Marks) A1. e An investment offers $200,000 per year for 10 years. What is the payback if the investment costs $875,000? (3 Marks) 1 *I Focus