Principles of Finance (FINA2202)
Faculty of Economics and Management Science (FEMS)
Semester: Resit
Level: 200
Year: 2016
Duration: 3Hours
Instructions: answer all questions
Question one (10 marks)
Write a short statement explaining three appraisals of the interest rate. (your development must
not exceed 15 lines)
Question two (10 marks)
Write short statements explaining the time value of money. (your development must not
exceed 10 lines)
Question three (10 Marks)
Provided that t
0
=2016, you are required to provide the future value of the following payments in
2035:
- 2018: CFAF908,000
- 2020: CFAF707,000
- 2022: CFAF166,560
- 2026: CFAF456,000
- 2029: CFAF346,000
The interest rate is 13%
Question four (10 marks)
A bill of exchange has the following features
- Nominal value: CFAF237,890
- Due date: 27
th
October 2016
On 20
th
September 2016, the debtor request to defer the payment on 12
th
December 2016.
What will be the new nominal value of this bill if the discount rate is 10.65%
Question five (30 marks)
Mr. FUTELA and Mrs. SONG were offered each CFAF4,360,000 by their bank at the
following conditions:
- Maturity: 6 years
- Interest rate of 16.75%
- 6 constant annual installments
1. What each annuity is worth? (10 marks)
THE UNIVERSITY OF BAMENDA
FACULTY OF ECONOMICS AND MANAGEMENT SCIENCES
2nd Semester Resit Course : Principles of Finance
Course Code: FINA202
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2. Mrs. SONG decided to make a single payment at the maturity (6
th
year) where as Mr.
FUTELA opted for annuities valued each CFAF927,407.
a. Determine the amount of the single payment made by Mrs. SONG in order to settle
her debt. (10 marks)
b. Based on the new annuity, determine the number of annuities required in order to
settle Mr. FUTELA’s debt. (10 marks)
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