UESTION $12$

$($a$)$ Define Corporate$/$Managerial Finance and discuss the goals of Corporate financial management. In your discussion, be sure to compare and contrast the share price maximization goal with the profit maximization goal of microeconomics.

$(10$ marks$)$

$($b$)$ Mr$.$ Banda has reached retirement age and recently retired. He wishes to provide retirement income for himself and is considering an annuity contract with ZSIC. Such a contract pays him an equal amount each year he lives. ZSIC expects Banda to live another $20$ years and that is the duration it bases its calculations.

$($i$)$ If ZSIC uses an interest rate of $15\%$ in its calculations, what must Banda pay at the outset for an annuity of K$40,000$ per year? $($Assume payments are at the end of the year$).$

$(8$ marks$)$

$($ii$)$ What if Banda had $K750,000$ to put into the annuity, how much would he receive each year at $15\%?$

$(7$ marks$)$