Entrepreneurial Finance Question Paper
Entrepreneurial Finance
Course:Master Of Business Administration
Institution: Kenyatta University question papers
Exam Year:2010
KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2009/2010
INSTITUTE OF OPEN LEARNING EXAMINATION FOR THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
BAC 604: ENTREPRENEURIAL FINANCE
DATE: Thursday 22nd July, 2010
TIME: 2.00 p.m. – 5.00 p.m.
________________________________________________________________________
INSTRUCTIONS
Answer Question ONE and any other THREE.
Q1.
The treasurer of Nairobi Holdings believes that his company will not have sufficient working capital to carry out its operations. He wants to determine what amount should be borrowed to supply this needed capital and when it should be borrowed and when repaid. It is now June and beginning in July the company will have Kshs.18,300 cash that is, as of July 1. Purchases in July are expected to reach Kshs.85,000; general expenses, Kshs.15,000; accounts receivable, Kshs.60,000; accounts payable, Kshs.45,000 and sales, Kshs.75,000. For August, the treasurer estimates purchases of Kshs.100,000; general expenses Kshs.15,000; sales Kshs.75,000; accounts receivable Kshs.70,000; accounts payable, Kshs.50,000; and taxes Kshs.8,500. For the following months September, October, November and December, sales are estimated to be, respectively, Kshs.95,000, Kshs.100,000, Kshs.110,000 and Kshs.70,000; purchases Kshs.110,000, Kshs.120,000, Kshs.80,000 and Kshs.65,000; accounts payable, Kshs.60,000, Kshs.75,000, Kshs.60,000 and Kshs.95,000, Kshs.95,000 and Kshs.125,000; general expenses Kshs.17,500, Kshs.20,000, Kshs.20,000 and Kshs.20,000 and taxes in December Kshs.8,500.
(i)
Is the treasurer correct in that the company will be in need of short-term financing? Explain your answer in detail. [20 marks]
(ii)
What specific financing actions do you recommend to the treasurer of Nairobi Holdings? Justify your answer. [5 marks]
Q2.
(a)
Explain two methods of valuing the shares of unquoted limited company. [15 marks]
(b)
What are the main sources of finance available to Jua Kali artisans in Kenya? Explain your answer. [10 marks]
Q3.
(a)
Why is it important for a business to have a strategy? [10 marks]
(b)
Using a hypothetical case draft a business plan. Ensure that the plan covers all the sections.
[15 marks]
Q4.
(a)
In valuing the shares of unquoted limited company, what points should be
given further investigation in order to reduce the likelihood of an error in
the valuation.
[15 marks]
(b)
How would you go about raising funds for newly established small scale
business?
[10 marks]
Q5.
(a)
Kenya government came up with economic stimulus package in its
2009/2010 fiscal year. A layman approaches you wanting to know what
“economic stimulus package” means, and how he can benefit from it.
What advice would you give?
[15 marks]
(b)
Why is it normally difficult for small scale enterprises to raise investment
capital? What can be done to increase access to funds by such entities?
[10 marks]
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