NATIONAL OPEN UNIVERSITY OF NIGERIA
91, CADASTRAL ZONE, NNAMDI AZIKWE EXPRESS WAY, JABI – ABUJA
FACULTY OF MANAGEMENT SCIENCES
JULY 2017 EXAMINATION QUESTIONS
Course Code: MBF 839 Credit Unit: 3.
Course Title: Quantitative Techniques for Banking and Finance
Time Allowed: 2½ 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.
3. Show all your calculations for appropriate marks.
Question
1a. Simplify 15 + 3+2³ x 1- 4 x 2 (3 + I) (10marks)
1b. A firm is faced with two alternative investment plans; Plan 1 will cost #750 and plan 2 #950. Both plans involve the purchase of equipment the life of which is four years, and the current rate of return on capital is expected on capital is expected to be 20%. The estimated cash flows resulting from the projects are:
Years 1 2 3 4
Plan 1 #500 #200 #400 #250
Plan 2 #700 #600 #400 #350
Required: Compute for the present value of the expected returns assuming a rate of return on capital of 20% and state your preferred project based on your computation. (15marks)
Question
2a. Define Investment decisions and Annuity. (8marks)
2b. Suppose that N1,000 are placed in the savings account of a bank at 5
percent interest rate. How much shall it grow at the end of three
years? (7marks)
Question
3a. Define Capital budgeting (5marks)
3b. An equipment costing #1,000 has an expected life of 5years. It is estimated that the cash flow resulting from the use of the machine will be #400 a year. The rate of return expected from capital of the type is 15%. Is the investment worthwhile? (10marks)
Question
4a. Explain the following;
i. Bond with maturity (3marks)
ii. Pure Discount Bonds (3marks)
iii. Perpetual Bonds (3marks)
4b. Describe the objective functions and the constraints of L.P. (6marks)
Question
5a. Differentiate the four costs associated with inventory. (5marks)
5b. The following data relate to a particular stock item
Normal Usage 110 per day
Minimum Usage 50 per day
Maximum Usage 140 per day
Lead time 25-20 days
EOQ 5000
Using this data, calculate the various control levels. (10marks)
6a. Discuss five advantages of quantitative skills for managers. (7marks)
6b. What are the four (4) advantages and disadvantages of the periodic review system of inventory control. 1mark each @ each point = (8marks)
You can get the exam summary answers for this course from 08039407882
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