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- State the demerits of certainty equivalent approach.(Solved)
State the demerits of certainty equivalent approach.
Date posted: April 13, 2021.
- State the merits of certainty equivalent approach.(Solved)
State the merits of certainty equivalent approach.
Date posted: April 13, 2021.
- Assume a project costs Sh 30,000 and yields the following uncertain cashflows:
Compute the NPV of the project(Solved)
Assume a project costs Sh 30,000 and yields the following uncertain cash flows:
Year Cash flow
1 12,000
2 14,000
3 10,000
4 6,000
Assume also that the certainty equivalent coefficients have been estimated as follows:
α0 = 1.00
α1 = 0.90
α2 = 0.70
α3 = 0.50
α4 = 0.30
The risk-free discount rate is given as 10%
Required
Compute the NPV of the project
Date posted: April 13, 2021.
- Outline the methods that can be used to incorporate risk into capital budgeting decisions.(Solved)
Outline the methods that can be used to incorporate risk into capital budgeting decisions.
Date posted: April 13, 2021.
- Study the table below and compute the expected cash flow.(Solved)
Study the table below and compute the expected cash flow.
Date posted: April 13, 2021.
- Outline the possible attitudes towards Risk.(Solved)
Outline the possible attitudes towards Risk.
Date posted: April 13, 2021.
- Define the term risk associated with a project.(Solved)
Define the term risk associated with a project.
Date posted: April 13, 2021.
- Project A has the following cashflows over its useful life of 3 years. The market value (Abandonment
value) has also been given.(Solved)
Project A has the following cashflows over its useful life of 3 years. The market value (Abandonment value) has also been given.
Year Cash Abandonment
flow value
Sh`000' Sh`000'
0 (4,800) 4,800
1 2,000 3,000
2 1,875 1,900
3 1,750 0
Required:
Determine when to abandon the project assuming a discount rate of 10%.
Date posted: April 13, 2021.
- Management is faced with eight projects to invest in. The capital expenditures during the year has been rationed to Sh 500,000 and the projects have...(Solved)
Management is faced with eight projects to invest in. The capital expenditures during the year has been rationed to Sh 500,000 and the projects have equal risk and therefore should be discounted at the firm's cost of capital of 10%.
Required:
Determine the optimal investment sets.
Date posted: April 13, 2021.
- A company is considering two mutually exclusive projects requiring an initial cash outlay of Sh 10,000 each and with a useful life of 5 years....(Solved)
A company is considering two mutually exclusive projects requiring an initial cash outlay of Sh 10,000 each and with a useful life of 5 years. The company required rate of return is 10% and the appropriate corporate tax rate is 50%. The projects will be depreciated on a straight line basis. The before depreciation and taxes cash flows expected to be generated by the projects are as follows.
Required:
Calculate for each project
i. The payback period
ii. The average rate of return
iii. The net present value
iv. Profitability index
v. The internal rate of return
Which project should be accepted? Why?
Date posted: April 13, 2021.
- State and explain the two groups of investment appraisal techniques.(Solved)
State and explain the two groups of investment appraisal techniques.
Date posted: April 13, 2021.
- What are capital budgeting decisions?(Solved)
What are capital budgeting decisions?
Date posted: April 13, 2021.
- Two neighbouring countries have chosen to organize their electricity supply industries in different ways. In
country A, electricity supplies are provided by a nationalized industry. On...(Solved)
Two neighbouring countries have chosen to organize their electricity supply industries in different ways. In
country A, electricity supplies are provided by a nationalized industry. On the other hand in country B
electricity supplies are provided by a number of private sector companies.
Required:
(a) Explain how the objectives of the nationalized industry in country A might differ from those of the private sector companies in country B.
(b) Briefly discuss whether investment planning and appraisal techniques are likely to differ in the nationalized industry and private sector companies.
Date posted: April 13, 2021.
- Explain the forms of informational efficiency.(Solved)
Explain the forms of informational efficiency.
Date posted: April 13, 2021.
- State and explain three types of efficient market hypothesis.(Solved)
State and explain three types of efficient market hypothesis.
Date posted: April 13, 2021.
- In which ways is corporate governance important?(Solved)
In which ways is corporate governance important?
Date posted: April 13, 2021.
- Define the term corporate governance.(Solved)
Define the term corporate governance.
Date posted: April 13, 2021.
- Briefly describe the required rate of return (Ri).(Solved)
Briefly describe the required rate of return (Ri).
Date posted: April 13, 2021.
- Define the term financial management.(Solved)
Define the term financial management.
Date posted: April 13, 2021.
- Why is it important for management to align the IT strategy to the Corporate Strategy?(Solved)
Why is it important for management to align the IT strategy to the Corporate Strategy?
Date posted: April 13, 2021.
- Differentiate between a Corporate Strategy and an IT strategy.(Solved)
Differentiate between a Corporate Strategy and an IT strategy.
Date posted: April 13, 2021.
- Using as much of the foregoing information as you need, and inventing any additional minor details as appropriate, write a report to the Managing Director...(Solved)
With technology integration and the web’s high speed environment which forces constant
collaboration, an organization must react in real time to its strategic changes. This will only be
possible if it exploits new Internet technologies.
Successful e-companies share fundamental principles that have proved critical to their success
in the global marketplace.
You have been requested by the Managing Director of your organization to carry out a study of
business transformation on the Internet in order to identify several important factors common to
their success in the business world. Your report will be tabled at the next board meeting. You
obtain the following information from various sources through Internet.
• The most successful organizations are being pushed by their top management to exploit new Internet technologies.
• Understanding e-commerce is a key to success in today’s globalizing economy, where rules formulated in distant capitals have an increasing impact on cross-border trade and competition in home markets.
• Businesses have been swift in realizing the opportunities provided by the web and
have developed websites in order to advertise and sell products and services, promote
corporate images and; to provide information (especially public services).
• Advantages in using the web include a reduction in the cost of advertising, cheaper and
easier provision of information, the lack of a need to maintain a shop front, the ease of
crossing geographical boundaries and the absence of a middleman.
• The web’s high-speed environment forces tight cross-functional integration across al
the company’s business divisions and functions and will also force management to
acquire IT skills as well as business skills to lead such change.
• Businesses are using intranets for the internal display of company manuals covering
employment and other procedures; easily updated internal news and information
services, company catalogues; and project notice boards (to which project participants
can add information and comments to be seen by all).
• Intranets enable employers to talk with and challenge one another, share ideas and
create new knowledge fostering experimentation with new ideas, products and services
before they are launched.
• The network also extends to customers through the use of extranets for enhancing
customer relationships and managing its supply-chain.
• Companies can generate over 50% of their total revenue on-line with about 40% of unit
volume shipped directly to customers without the company ever touching the product.
• Putting the customer in the driver’s seat makes business sense, especially given the
one-to-one marketing focus that is becoming the hallmark of electronic commerce.
• Many companies, not only welcome you by name on their sites (if you have previously
purchased a product), but also remember your preferences and uses intelligent datamining
software to suggest related products and services.
• They make you feel at home on their sites, so much so that you don’t mind doing some
‘work’ for them such as order entry which saves their time and money.
• The Internet is uncharted territory and successful internet companies are continually
experimenting.
• While the market will be the final judge, the important lesson is that companies are
taking risks to become more efficient than they are now.
• The manager from an internet start-up advised, “in our organization, failing is acceptable,
failing to learn from failure is not acceptable.”
• Successful companies hire not only the best, but the right kind of people who accept
an environment of rapid change, aggressive growth, are optimistic and like to have fun
while working hard.
• Rewards in terms of very high on-line sales accounting for more than 50% of total sales
are driving most companies in the direction of e-commerce.
• The question ‘to be or not to be on the internet’ is no longer relevant – the real question
has become how to develop a successful Internet strategy.
• Organizations that do not make this transition will fail, they will become irrelevant, or
cease to exist.
• The use of Internet and the Web will continue to grow in importance for business as
new applications are exploited and the number of people able to access the internet
increases.
Required:
Using as much of the foregoing information as you need, and inventing any additional minor details as appropriate, write a report to the Managing Director which will be presented for discussion during the next board meeting.
Date posted: April 12, 2021.
- What is meant by the term ‘effective listening? Describe how this skill may be acquired and developed.(Solved)
What is meant by the term ‘effective listening? Describe how this skill may be acquired and developed.
Date posted: April 12, 2021.
- To whom does the entrepreneur owe a duty of obligation in meeting the ends of his business?(Solved)
To whom does the entrepreneur owe a duty of obligation in meeting the ends of his business?
Date posted: April 12, 2021.
- What is Social Responsibility as applied in entrepreneurship?(Solved)
What is Social Responsibility as applied in entrepreneurship?
Date posted: April 12, 2021.
- Whose responsibility is it to prepare the business plan? Why is this so important?(Solved)
Whose responsibility is it to prepare the business plan? Why is this so important?
Date posted: April 12, 2021.
- Proponents of various schools of thought on the motivational theory of entrepreneurship have come up with various arguments to explain why an entrepreneur would go...(Solved)
Proponents of various schools of thought on the motivational theory of entrepreneurship have come up with various arguments to explain why an entrepreneur would go into business. Clearly explain the various schools of thought as you understand them.
Date posted: April 12, 2021.
- What do you understand by the term ‘Motivational theories of entrepreneurship?(Solved)
What do you understand by the term ‘Motivational theories of entrepreneurship?
Date posted: April 12, 2021.
- John Kamau has won Kshs. 500,000 in the charity sweepstake. He has decided to open a hotel at the city center selling fast foods. Advice...(Solved)
John Kamau has won Kshs. 500,000 in the charity sweepstake. He has decided to open a hotel at the city center selling fast foods. Advice John on the various forms of business ownership and the factors he should bear in mind in choosing which form would be appropriate for his business.
Date posted: April 12, 2021.
- What thought process should the entrepreneur apply in identifying a business opportunity?(Solved)
What thought process should the entrepreneur apply in identifying a business opportunity?
Date posted: April 12, 2021.