Exam Melb. Sem.1 07 (A) - RMIT FINAL EXAMINATION...

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RMIT FINAL EXAMINATION EXAMINATION DETAILS Course code: BAFI1008 Course name: Business Finance Date of exam : 7 th June 2007 Time of exam : 1-45 Duration of exam : 3 hours and 15 minutes including reading time Total no. of pages (incl. cover sheet):14 ALLOWABLE MATERIALS AND INSTRUCTIONS TO CANDIDATES : 1. The examination paper will be marked out of 100 but will represent 70% of the assessment in this subject. 2. This paper is divided into three sections: Section A 30 marks Section B 40 marks Section C 30 marks 3. Students should allocate 1.8 minutes per mark 4. You must enter your answers for Section A, the Multiple Choice Section, in the Examination paper itself, and therefore the complete examination paper MUST be handed in at the end of the examination together with your exam answer books. No pages from the examination paper can be removed from the examination paper 5. You are required to only undertake eight (8) questions from Section B and three (3) questions from Section C. Make sure on the front cover of the exam book you indicate the questions that you have chosen to do from sections B and C 6. The use of a calculator is permitted, however, accompanying instruction manuals must not be brought into the examination room. 7. In questions where calculations are required students are only required to calculate their answer to two decimal places. 8. For the numerical questions students will be allocated marks for the correct workings even if student’s final numerical answer is wrong. 9. A formula sheet is included with this paper. 10. Students must underline their family name on the exam answer book 11. You must return the entire examination question paper together with your answer books 1
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SECTION B Students are required to answer 8 of the below 14 question. The section counts for a total of 40 of the 100 marks available on the exam paper and each of the questions counts for 5 marks. Question 1 Explain in simply terms what you would need to know and how you would go about determining the interest and principal components of a loan repayment. Question 2 Five years ago Chris entered into a loan agreement to borrow $200,000, and repay the loan over 20 years through equal monthly instalments. If the interest rate was fixed at 8% p.a. for the entire term of the loan, what is the amount of each monthly instalment: Question 3 Club Auto Parts’ last dividend, D 0 was $0.50, and the company expects to experience no growth for the next 2 years. However, Club will grow at an annual rate of 5% in the third and fourth years, and, beginning with the fifth year, it should attain a 10% growth rate which it will sustain thereafter. Club has required rate of return of 12%. Calculate the value of the stock today. Question 4 You have just purchased 10 newly issued $100 five year ABC Company Ltd.
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