Question 1 Shareholder wealth management is always considered a more reasonable argument for financial management than profit maximization. Contrast the objectives of maximizing profit earnings with that of maximising shareholder wealth. (10 marks) Question 2 Describe the types of covenants that are usual placed on financing contracts and explain the role they play in debt and equity financing. (10 marks) Question 3 a. Briefly describe why dividends are the basis for the valuation of common stock. (5 marks) b. Illustrate how the treatment of bonds and preferred stock is the same when it comes to their valuation. (5 marks) Question 4 a) What is the present value of $374 paid in year 9 if the cost of capital is 9 percent? (2 marks) b) The Ferguson family borrows a housing loan of $120 000 from BBS, payable over a period of twenty years. Interest is payable annually at the end of each period. If interest is 5%, calculate the annually payment by the family to BBS. (4 marks) c) Majwana Mining Company (MMC) plans to embark on an underground diamond mining project in 6 years-time and wish to acquire modern machinery projected to cost $60 million. If Majwana saves $8 million with a local bank at the end of each year, what interest should the company earn to achieve this goal. (4 marks)