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2 Marks QUESTION Peter has secured a mortgage for S40M for a tenure of25 years. rate of interest is 9% per annum compounded monthly. Determine the following: (5) (a) The monthly payment (1) (b) The total payback (d) The difference between the interests contained in the 30th and 40th payments (4) (e) The principal contained in the 50th payment QUESTION 2 MSBM has the following capital structure and associated cost: S25M Bonds S50M Common Stocks MSBM is also eyeing the following investment options in hybrid cars: Nissan H brids Honda H brids To ota H brids -Duratioiy cash Flays 12 h 0/0 Yer - 2 3 ,OCash Flews -250,000 -300,000 160,000 150,000 120,000 180,000 80,000 160.000 -200,000 60,000 80,000 140 ooo Determine: (a) The weighted average cost of capital if corporate tax is 25%. (b) The project(s) that MSBM should reject Marks (5) (8) (c) A preferred stock is expected to pay a dividend of SIO per share fifteen years from today. If you require a rate of 10 % per annum, establish the (2) price of the stock. QUESTION 3 Ms. Lei has the choice of two investments as shown below (fi res are er 1,000 Pro ect Green Startu Cost Cash flow Year 2 Cash flow Year 3 Cash flow Year 4 4,000 Proect Brown Startu Cost I ,OOO Cash flow Years 1-4 2,000 Cash flow Year 5 3,000 Cash flow Year 6 (a) Given Assume i (12) = 10%, detemine the following: (i) The NPV of Project Green (ii) X such that the one would be indifferent to the choice of project. (b) Mia wants to invest in Hedge funds but is unsure of the associated risks. Detail the risk exposure she would be facing. (c) Does Simple Interest yield more than Compound Interest? ooo 3 ooo 5,000 x Marks (4) (3) (5 (3' Semester 1 2022/