NATIONAL OPEN UNIVERSITY OF NIGERIA

UNIVERSITY VILLAGE, PLOT 91, CASDASTRAL ZONE, NNAMDI AZIKIWE EXPRESS WAY, JABI, ABUJA.
FACULTY OF MANAGEMENT SCIENCES
APRIL/MAY 2019 EXAMINATION

COURSE CODE: BFN303                                                                          

CREDIT UNIT: 3

COURSE TITLE: FINANCIAL MANAGEMENT

TIME ALLOWED: 2^1/2 HOURS

INSTRUCTIONS:

1. Attempt Question 1 and any other three (3) Questions.

2. Question 1 is compulsory and carries 25 marks while the other 3 Questions carry 15 marks each.

1(a) Kolade bought a 12% redeemable debenture, redeemable at par in 10 years’ time. The current market value of the debenture is N80, associated tax is 40%. What is the cost of  the redeemable debenture?   15 marks

1(b) Explain any five (5) factors to be considered by managers when prospecting for loans.  10 marks

2(a) Explain short term finance.   2 marks                                                                                                                                        

(b) Discuss the methods for obtaining short term finance                                  3 marks

 (c)  Evaluate the implications of using short term finance to finance long term project.  10 marks

3. Discuss the procedures involved in capital budgeting decisions.

15. marks

4(a) In clear terms, explain what you understand by Financial Management.  5 marks

(b)  Explain the three main functions of a Financial Manager.    10 marks

5. Adams & Co. invested N300,000 in a certain investment yielding the following cash inflow after tax: 

            Year 1:                        100,000

            Year 2:                        200,000          

            Year 3:                        50,000

            Year 4:                        40,000

Given that the life span of the investment is 4 years.

 Required: Compute the average Return on Investment ROI or ARR.          15 marks

6. Write short notes on any five of the followings:

    a) Cash budget

    b) Accelerated cash collections

    c) Optimal cash level

    d) Transactionary motives

    e) Precautionary motives

     f) Speculative motives   15 marks