NATIONAL OPEN UNIVERSITY OF NIGERIA

UNIVERSITY VILLAGE, PLOT 91, CASDASTRAL ZONE, NNAMDI AZIKIWE EXPRESS WAY, JABI, ABUJA.
FACULTY OF MANAGEMENT SCIENCES
JULY 2018 EXAMINATION

COURSE CODE:    BFN732                                                                          Credit Units: 2

COURSE TITLE:   BUSINESS FINANCE

TIME ALLOWED: 2 Hours

INSTRUCTIONS:   1. Attempt question number one (1) and any other (2) questions.

                                   2. Question number 1 carries 30 marks, while the other two (2) questions carry 20 marks each.

1a. Discuss the determinants of working capital.   8Marks

b. Explain the functions of Cash management in a firm.     7Marks

c. Adams Ltd use a particular component at the rate of 24,000 per year. These are obtained from an outside supplier at a basic cost of 25k each. Replenishment orders can be obtained promptly, though it entails sending a man and a lorry to collect the components, this would cost #20, this is assumed to be the only cost of ordering. The storage cost of stock is 15% of the cost of the component.

Required to calculate the:

i. EOQ         5Marks

ii. Total Controllable Cost?   5Marks

iii. Total cost of this order?    5Marks

2a. Explain the term Stock Management.   5Marks

b. Akoka limited is to undertake a project requiring N1,000,000 outlay.

Required to calculate the: Payback Period.

i) The project generates N200,000 annually.

ii) The project has the following cash flow profile:

Yr                    cf (N)

1                      200,000

2                      220,000

3                      240,000

4                      200,000

5                      190,000     15Marks