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    Corporate Finance Tutorial Questions

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    abdallazaqs
    This concern with financial management

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    Corporate Finance Tutorial Questions

    Uploaded by

    abdallazaqs
    3 views2 pages
    This concern with financial management

    Original Title

    CORPORATE FINANCE TUTORIAL QUESTIONS

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    This concern with financial management

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    © All Rights Reserved
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    Download as pdf or txt
    3 views2 pages

    Corporate Finance Tutorial Questions

    Uploaded by

    abdallazaqs
    This concern with financial management

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    TUTORIAL QUESTIONS

    CORPORATE FINANCE
    Academic year 2023/2024
    Bacc2,BBF2,BTX2,BEF 2, BAIT 2 & BSP2
    Prepared by: CPA F.Lyimo

    1. Evaluate and explain the roles, motivations and interests of different stakeholder’s in
    financing decisions.
    2. Match the following:

    Stakeholder Stakeholder objectives


    (i) Employees (a) To pay a reasonable price for the goods / services.
    (ii) (ii) Customers (b) To receive payment on time.
    (iii) (iii) Suppliers (c) To increase wealth through dividends or capital appreciation
    (iv) (iv) Shareholders (d) To receive a fair remuneration according to ability and performance

    3. What are the two aims of working capital management?


    4. Explain the main functions of a financial manager
    5. What is meant by the ‘principal-agent’ relationship that exists between managers and
    shareholders, and how does this give rise to the ‘agency problem’?
    6. It is said that remuneration schemes linked to performance encourage managers to focus
    on the achievement of corporate objectives as opposed to their own personal objectives.
    Explain the operations and limitations of such schemes as performance related pay.
    7. Source4u Ltd is an innovative IT services organization that brings people, business and
    technologies together. It has clients around the world in a variety of industries including
    automotive, oil and gas and manufacturing. Source4u’s aim is to add value for clients by
    improving efficiency and productivity or reducing waste. It has been on an earnings
    growth trajectory of 20-25% for the past few quarters. The management wants to ensure
    that the growth rates are maintained.

    As a finance manager of the organization, discuss the external factors / scenarios that
    could impact business and finance strategies and explain how the company could plan for
    it.
    8. Generally, when we look at the long-term goals of a company, we can say that there is no conflict
    of interest. However, in the short run there is a possibility of a conflict between the various
    stakeholder objectives.

    9. Explain the nature of the agency problem and discuss the use of share option schemes and
    performance-related pay as methods of reducing the agency problem in a stock-market listed
    company.

    10. Define the time value of money concept and explain why Money has time value.

    11. Distinguish between present value and future value

    12. Chris will receive a 4- year annuity of TZS 500 per year beginning at year 6. If the interest
    rate is 10%, what is the present value of his annuity?

    13. Balati will receive TZS 50000 a year for 20 years from the state lottery. Assuming that
    the first payment occurs immediately, and if the discount rate is 8%, what is its present
    value?

    14. John receives an annuity of TZS. 450 payable once every two years. The annuity
    stretches out over 20 years. The first payment occurs at year 2, i.e. two years from
    today. The annual interest rate is 6%. What is its present value?

    15. You estimate that you will need TZS 5,000,000 for a major expenditure in five years’ time.
    How much would you have to deposit in a bank account today to accumulate this amount,
    if the rate of interest on deposits is ten per cent?

    16. If the rate of interest is 20 per cent would you prefer TZS 10m today or TZS 50m to be
    received in ten years from now?

    17. A project that requires an initial outlay of TZS 12m, is expected to produce a net cash
    flow of TZS 5m at the end of each of the next three years, and the interest rate is 10 per
    cent. What will be the value of the project at the end of year three?

    18. The business intends to receive an income of TZS 120,000 for infinite tenure. The cost of
    capital for the business is at 13 percent. The cash flows grow at the proportionate basis
    of 3 percent. Help the management to determine it.

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