Reference no: EM132766978

Question 1

Discuss what is meant by 'making investment decisions' and 'making financial decisions' for a financial manager.

Question 2

Discuss how a financial manager can use 'current ratio' and 'debt ratio' in ratio analysis to better manage a firm.

Question 3

Discuss the difference between ordinary annuity and annuity due and how it affects the value of an investment.

Question 4

A firm is evaluating an investment. With the firm's cost of capital is 8%, calculate the net present value (NPV) of the 5-year investment with an annual cash inflow of $30,000. Given the initial investment of the investment is $80,000. Should the company invest in this project? Explain your reason(s).

Question 5

A firm has decided to make an investment, an ordinary annuity of $10,000 per year for fifteen years. Calculate the future value of the investment at the end of fifteen years, given the firm earns 4% annual interest.

Question 6

ST Manufacturing Ltd is evaluating an investment of a machine that cost $200,000. With the new machine, the firm's annual cash inflow will increase by $40,000 every year for the next 7 years. At the end of the 7 years, the company will scrap the machine and do not expect to receive any salvage value for it. Given the firm's cost of capital is 6%, calculate the internal rate of return (IRR) of this investment. Should the firm purchase the machine? Give your reason(s).

Question 7

Fast Securities Ltd is looking into an investment of $100,000. The investment is expected to generate a net operating profit after tax (NOPAT) of $20,000. Given the firm's weighted average cost of capital of 10% and tax rate of 20%, calculate the economic value added (EVA) of the investment. Should the firm accept or reject the investment? Give your reason(s).