QUESTION THREE (20 MARKS) a) You are a Finance Manager of a mining company that has identified an investment opportunity to the tune of K500 million. Discuss the primary funding sources available for financing such a project. Your answer should identify the funding sources, the instruments used to raise capital and the financial markets and institutions that could be used to raise the capital. (12 Marks) b) In most years new issues of stock are a tiny fraction of total stock market trading. In other words, secondary market volume is much greater than primary market volume. Does the fact that firms only occasionally sell new shares mean that the stock market is largely irrelevant to the financial manager? Hint: How is the price of the firm's srock determined, and why is it important to the financial manager? (8 Marks) QUESTION FOUR (20 MARKS) As you can see, someone has spilled ink over some of the entries in the balance sheer and income statement of Transylvania Railroad. Using the following information to work out the missing entrics. (20 Marks) \begin{tabular}{lc} \hline Long-term debt ratio & .4 \\ Times interest earned & 8.0 \\ Current ratio & 1.4 \\ Quick ratio & 1.0 \\ Cash ratio & .2 \\ Return on assets & 18% \\ Return on equity & 41% \\ Inventory turnover & 5.0 \\ Average collection period & 71.2 days \\ \hline \end{tabular} INCOME STATEMENT (figures in millions of dollars) \begin{tabular}{lc} \hline Net sales & \\ Cost of goods sold & \\ Selling, general, and administrative expenses & 10 \\ Depreciation & 20 \\ Earnings before interest and taxes (EBIT) & \\ Interest expense & \\ Income before tax & \\ Tax & \\ Net income & \\ \hline \end{tabular} B.MLANCE SHEET