Question: QUESTION 1 ( 25 Marks) ( a ) The finance manager goal should focus on creating the firms value which maximizes the shareholders wealth rather

QUESTION 1 (25 Marks)

(a) The finance manager goal should focus on creating the firms value which maximizes the shareholders wealth rather than on profit maximization. Discuss why maximizing the shareholders wealth is a better goal than profit maximization?

(10 marks)

(b) Yusha wishes to invest RM4, 000 for one year in a savings account paying 4% interest compounded quarterly. What is the future value of Yushas investment?

(5 marks)

(c) Faizal intends to buy a new car, the Myvi for RM57,650, but only has RM20,000 in cash. How many years will it take for RM20,000 to grow to RM57,650 if it is invested at 10% interest compounded annually.

(5 marks)

(d) Monsters Berhad is a utility company that recently paid a common stock dividend of RM2.35 per share. Determine the current price of a share of Monsters common stock if its dividend growth rate is expected to remain at 7 percent per year indefinitely and its equity cost of capital is 12 percent.

(5 marks)

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