GFIN5113 Financial Management & Economics Assignment: Real-World Case Studies on Capital Structure and Law of Supp

SET A: Financial Management (GFIN5113)

Total Marks: 50 | Duration: 1–2 hours

Questions

1. Explain the concept of Time Value of Money (TVM) and demonstrate it using an example involving compound interest.

(6 marks)

2. Given the following data, calculate the Net Present Value (NPV) of a project with an initial investment of RM50,000 and expected cash inflows of RM15,000 annually for 5 years. Use a discount rate of 10%.

(8 marks)

3. Critically evaluate the Modigliani-Miller theorem on capital structure in the presence of taxes.

(7 marks)

4. Calculate the Weighted Average Cost of Capital (WACC) for a firm with the following data:

• Equity = RM300,000, Cost of equity = 12%
• Debt = RM200,000, Cost of debt = 6%
• Corporate tax rate = 25%

(7 marks)

5. Differentiate between systematic and unsystematic risk in portfolio theory. Provide examples and implications for diversification.

(6 marks)

6. Discuss two key strategies for managing working capital in a manufacturing firm.

(6 marks)

7. Briefly explain how Islamic Finance principles can be integrated into corporate financial decision-making.

(4 marks)

SET B (SECOND): Financial Management (GFIN5113)

Total Marks: 50 | Duration: 1–2 hours

Questions

1. Explain how annuities work and distinguish between ordinary annuities and annuities due with examples.

(6 marks)

2. Calculate the value of a bond with a face value of RM1,000, a 5% coupon rate (annual), 4 years to maturity, and a market rate of 6%.

(8 marks)

3. Critically discuss the trade-off theory in capital structure decisions and how it applies to real firms.

(7 marks)

4. A company is considering two investment projects. Project A has a Payback Period of 2.5 years and an IRR of 14%, Project B has a Payback Period of 3.5 years and an IRR of 16%. Which project should be selected and why?

(7 marks)

Answer

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