Question: this is a degree level question Question 3 a) The involvement of institutional investors in the operational decisions of companies, they have invested in can

this is a degree level question

Question 3 a) The involvement of institutional investors in the operational decisions of companies, they have invested in can lead to long term improvement in returns to shareholders. Discuss the above statement in the light of the agency problem. Provide and support your view. (12 Marks) b) Earls Grey plc has a $15 000 000 mortgage that matures in 10 years. To save on interest cost, Earls Grey's accountant has to budget a fixed amount to be credited at the end of each year for 10 years. The accountant expects the company to earn 10% per annum on this account Calculate the budget figure must the company credit to this account to accumulate $15 000 000 by the end of 10 years. (4 Marks) By crediting the yearly amount, how much is Earls Grey savings in cost. (2 Marks) 3) The rich estate of a well-known personality wants to invest $13 billion today on an island which will be worth $50 billion in 10 years. The financial planner is asked at what annual rate of return would the estate would have to earn in order to possess the island in 10 years 17 Marks) Total: 25 Marks)

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