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Entrepreneurial Finance Question Paper
Entrepreneurial Finance
Course:Bachelor Of Commerce
Institution: Kenyatta University question papers
Exam Year:2010
KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2009/2010
SECOND SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR OF
COMMERCE
BAC 412:
ENTREPRENEURIAL FINANCE
=================================================================
DATE: MONDAY 5TH APRIL 2010
TIME: 2.00 P.M. – 4.00 P.M.
INSTRUCTIONS
Answer ALL Questions
Q.1
An entrepreneurial venture valued at sh 100,000 was damaged by fire to the extent of sh 32,000. how much is recoverable from the insurance company if the business is insured under an 80% coinsurance policy (meaning the insurer will pay full amount of loss only if the policy on the property is not less than a specified percentage of the full value of the property) for
a)
sh 82,000?
b)
sh 80,000?
c)
sh 60, 000
(18 marks)
Q.2
The cost of manufacturing an article was sh 294.
a)
What will be the net selling price of the gross margin of profit is 30% of the selling price. (6 marks)
b)
At what price should the goods be listed so that the manufacturer may allow entrepreneurs trade discounts of 20% and 10% and still make the 30% gross margin on the selling price?
(6 marks)
c)
The trade discounts on a certain list price were changed from 25% and 5% to 15, 10% and 5% . Which discount series yields the greater total discount and by how much, is it greater?
(6 marks)
Q.3
One of the main causes of failure of entrepreneurial ventures is excessive fixed costs.
a)
What effect will change in a venture's sales volume have on its break-even point, assuming that price remains constant? (4 marks)
b)
What effect would each of the following have on the degree of operating / average (fixed costs to variable costs) possessed by a venture?
i)
The venture becomes more capital intensive.
ii)
The venture has recently initiated a guaranteed annual wage.
(8 marks)
c)
The following items appear among the assets and liabilities of an
entrepreneurial venture
31-12-Y 1
31 -12 –Y2
Cash
Sh 300,000 Sh 400,000
Accounts Receivable
2,700,000 2,800,000
Accounts Payable
500,000 500,000
Long term debt
2,200,000 2,000,000
The general price index was 150 at the beginning of the year and 180 at the end.
Required:
What was the amount of loss caused by the purchasing power risk.(5 marks)
Q.4
An entrepreneur supplies chicken to a big hotel. All payments are by cheque which
cheque being mailed by the hotel to the entrepreneur and having available funds at the bank is 5 days.
Required:
a)
How much money is tied up witjh respect to this interval of time? (4 marks)
b)
A messenger service costing sh 1,200 per year will reduce the overall delay by 3 days should the entrepreneur undertake this plan if rate of interest on money is 24 %? (13 marks)
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