MU - S2 2004 - Business Finance

MU - S2 2004 - Business Finance - 04117865 Office Use Only...

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Office Use Only Monash University Semester Two Examinations 2004 Faculty of Business and Economics EXAM CODES: AFC2140 TITLE OF PAPER: BUSINESS FINANCE EXAM DURATION: 180 minutes writing time READING TIME 10 minutes THIS PAPER IS FOR STUDENTS STUDYING AT: (tick where applicable) ± Berwick ; Clayton ± Malaysia ± Distance Education ± Open Learning ± Caulfield ± Gippsland ± Peninsula ± Enhancement Studies ± Other (specify) INSTRUCTIONS TO CANDIDATES: This paper contains 9 questions. Students must answer ALL questions. Begin each question on a fresh page of the examination script book. A formula sheet is included which can be detached. During an exam, you must not have in your possession, a book, notes, paper, calculator, pencil case, mobile phone or other material/item which has not been authorised for the exam or specifically permitted as noted below. Any material or item on your desk, chair or person will be deemed to be in your possession. You are reminded that possession of unauthorised materials in an exam is a discipline offence under Monash Statute 4.1. AUTHORISED MATERIALS CALCULATORS (in line with Faculty policy) ; YES ± NO OPEN BOOK ± YES ; NO SPECIFICALLY PERMITTED ITEMS ± YES ; NO if yes, items permitted are: Candidates must complete this section if required to answer in this paper STUDENT ID __ __ __ __ __ __ __ __ DESK NUMBER __ __ __ __ SURNAME ........................................................................... SIGNATURE. ............................................. OTHER NAMES (in full) .................................................................................................................................. Page 1 of 7
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Question 1 [8 marks in total] A company has estimated that an independent investment project will generate conventional cash flows over a five year period and an internal rate of return (IRR) of 15 percent per annum. An appropriate required rate of return (RRR) for this investment project is estimated to be10 percent per annum. Using this information: (a) Define (i) IRR and (ii) RRR. (b) Explain how the IRR and RRR are related to one another and to the company’s
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This note was uploaded on 08/25/2008 for the course AFF 3111 taught by Professor Smith during the Three '08 term at Monash.

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MU - S2 2004 - Business Finance - 04117865 Office Use Only...

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