Faculty Business and Accounting
B7-FFM-
Assessment Name End Paper Code
(Eg: End/Sup)
17/G21/E
Fundamentals
Module Name Module Code B7-FFM-17
of Fin Mgmt
Semester July – Dec 21 Submission Mode Blackboard
(E.g Turnitin,
( E.g Jul-Dec-2021)
blackboard, hardcopy)
4 days
Total Marks 100 Duration
08 – 11 Nov 21
Assessment Type Exam/Submission
Written 11 Nov 2021
(Eg: Date
Written/Practical/Submission)
Eff Date: 18-03-2021
Instructions
1. Your Student ID and Name must be indicated on the answer sheet. Failure to do so will mean that your
work cannot be marked.
2. Answer ALL questions in Section A, answer any two questions in Section B and Section C is
compulsory.
3. Use Microsoft Word to write your answers.
4. Use Microsoft Excel for drawing graphs.
QP-ASM-001|Rev 006
5. Due: 08 – 11 Nov 21 through Blackboard SafeAssign Only.
6. Note that plagiarism is against the University’s Academic Honesty Policy and will attract a
penalty.
Page 1 of 5
, SECTION A
Answer all questions in this section, total marks = 40
QUESTION 1
At the end of 2018 Cresta Marakanelo announced, as part of a stock market briefing, that pre-tax profit for the
year had risen by 25%. Immediately after the announcement the share price fell by 8%.
Required
(a) Discuss why shareholders might be dissatisfied, despite higher profits? (8 marks)
(b) What other measure could be used to assess Cresta’s performance? (2 marks)
QUESTION 2
a) Kgalagadi Brewery Limited (KBL) has a large unused warehouse space in the Gaborone West Industrial
area. In capital budgeting terms, discuss whether this is a sunk cost or an opportunity cost. (4
marks)
b) Kabo and Bonolo are worried about the length of time it will take for the cash flows from their
Eff Date: 18-03-2021
restaurant in which they have made a total investment of $500,000 being $350,000 to take-over the
business and P150,000 to refurbish it. Cash flow projections from the project are below.
Year Net Cash flows ($)
1 70,000
2 70,000
3 80,000
4 100,000
5 100,000
6 120,000
After the sixth year, Kabo and Bonolo are confident that they could sell the business for $350,000.
Required,
QP-ASM-001|Rev 006
Calculate the payback period for the project. (6 marks)
QUESTION 3
a) Describe how investment in higher levels of inventory or receivables would affect the following;
(6 marks)
i) Profits?
ii) Liquidity?
b) Coleen is considering buying an equity share of Choppies. The stock has just paid a dividend of
P0.50, and both Coleen and the market expect the future dividend to be precisely at this level for the
Page 2 of 5
B7-FFM-
Assessment Name End Paper Code
(Eg: End/Sup)
17/G21/E
Fundamentals
Module Name Module Code B7-FFM-17
of Fin Mgmt
Semester July – Dec 21 Submission Mode Blackboard
(E.g Turnitin,
( E.g Jul-Dec-2021)
blackboard, hardcopy)
4 days
Total Marks 100 Duration
08 – 11 Nov 21
Assessment Type Exam/Submission
Written 11 Nov 2021
(Eg: Date
Written/Practical/Submission)
Eff Date: 18-03-2021
Instructions
1. Your Student ID and Name must be indicated on the answer sheet. Failure to do so will mean that your
work cannot be marked.
2. Answer ALL questions in Section A, answer any two questions in Section B and Section C is
compulsory.
3. Use Microsoft Word to write your answers.
4. Use Microsoft Excel for drawing graphs.
QP-ASM-001|Rev 006
5. Due: 08 – 11 Nov 21 through Blackboard SafeAssign Only.
6. Note that plagiarism is against the University’s Academic Honesty Policy and will attract a
penalty.
Page 1 of 5
, SECTION A
Answer all questions in this section, total marks = 40
QUESTION 1
At the end of 2018 Cresta Marakanelo announced, as part of a stock market briefing, that pre-tax profit for the
year had risen by 25%. Immediately after the announcement the share price fell by 8%.
Required
(a) Discuss why shareholders might be dissatisfied, despite higher profits? (8 marks)
(b) What other measure could be used to assess Cresta’s performance? (2 marks)
QUESTION 2
a) Kgalagadi Brewery Limited (KBL) has a large unused warehouse space in the Gaborone West Industrial
area. In capital budgeting terms, discuss whether this is a sunk cost or an opportunity cost. (4
marks)
b) Kabo and Bonolo are worried about the length of time it will take for the cash flows from their
Eff Date: 18-03-2021
restaurant in which they have made a total investment of $500,000 being $350,000 to take-over the
business and P150,000 to refurbish it. Cash flow projections from the project are below.
Year Net Cash flows ($)
1 70,000
2 70,000
3 80,000
4 100,000
5 100,000
6 120,000
After the sixth year, Kabo and Bonolo are confident that they could sell the business for $350,000.
Required,
QP-ASM-001|Rev 006
Calculate the payback period for the project. (6 marks)
QUESTION 3
a) Describe how investment in higher levels of inventory or receivables would affect the following;
(6 marks)
i) Profits?
ii) Liquidity?
b) Coleen is considering buying an equity share of Choppies. The stock has just paid a dividend of
P0.50, and both Coleen and the market expect the future dividend to be precisely at this level for the
Page 2 of 5
