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FMH810S-FINANCIAL MANAGEENT HOSPITAL AND TOURISM-1ST OPP- JUNE 2024 |
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nAm I BIA u n IVE RSITY
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF COMMERCE, HUMAN SCIENCE AND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING & FINANCE
QUALIFICATION: BACHELOR OF HOSPITALITY MANAGEMENT (HONOURS)
QUALIFICATION CODE: 08BHTH
COURSE CODE: FMH810S
LEVEL: 8
COURSE NAME: FINANCIAL MANAGEMENT:
HOSPITALITY AND TOURISM
SESSION: JUNE 2024
DURATION: 3 HOURS
PAPER: PRACTICAL AND THEORY
MARKS: 100
FIRST OPPORTUNITY EXAMINATION QUESTION PAPER
EXAMINERS:
H Kangala
MODERATOR: A Okafor
INSTRUCTIONS
• This question paper is made up of four {4} questions.
• Start each question on a new page.
• Answer All the questions in blue or black ink only.
• You are advised to pay due attention to expression and presentation. Failure to do so will
cost you marks.
• Start each question on a new page in your answer booklet and show all your workings.
• Questions relating to this paper may be raised in the initial 30 minutes after the start of
the paper. Thereafter, candidates must use their initiative to deal with any perceived error
or ambiguities and any assumption made by the candidate should be clearly stated.
PERMISSIBLE MATERIALS
Non-programmable calculator
THIS QUESTION PAPER CONSISTS OF 8 PAGES (Excluding this front page)
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Question 1
30 Marks
PART A
18 Marks
Answer the following multiple-choice questions:
INSTRUCTIONS: Please only write the question number and the letter for the correct
answer option. For example: 20. A
1. Which of the following has an influence on pricing decisions?
A. Customer demand
B. Actions of competitors
c. Government regulations
D. All of the above
2. What is the name of the practice of setting prices relatively low when introducing a
new product to the market?
A. Predatory pricing
B. Skimming pricing
c. Cost-plus pricing
D. Penetration pricing
3. Sunday newspapers (in Britain, France, Thailand, Sweden) often contain numerous
supplements (e.g., fashion, entertainment, property) to make the newspaper appear
greater value for money. These are called: ______
_
A. Premium pricing.
B. Discount pricing.
C. Loss leader pricing
D. Price bundling.
4. These are costs which do not vary according to the number of units of product made
or service sold:
A. Variable costs.
B. Working capital.
c. Fixed capital.
D. Fixed costs.
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5. The type of pricing that occurs when companies temporarily reduce their prices below
the standard price for a period to raise awareness of the offering to encourage trials
and raise short-term brand awareness is known as?
A. Relative price.
B. List pricing.
c. Loss-leader pricing.
D. Promotional pricing.
6. This allows us to determine how the quantity of an offering relates to the price at
which it is offered:
A. Price bundling.
B. Price elasticity.
c. Price inelasticity.
D. Price inflation.
7. The pricing approach where prices are set based on customers' perception of the
product offering is called: ____
_
A. Cost-oriented approach.
B. Value-oriented approach.
C. Competitor-oriented approach.
D. Demand-oriented approach.
8. When a 10% increase in price produces a 10% decrease (increase) in quantity
demanded. This is referred to as:
A. Elasticity of price.
B. Price elasticity of demand.
c. Demand elasticity of price.
D. Price and demand flexibility.
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9. This pricing approach involves setting a high price for the product at initial
introduction to make the product more accessible to the customers.
A. Customer-centric pricing.
B. Price skimming.
c. Market penetration pricing.
D. Price scanning
10. The pricing approach where prices are set based on the amount spent on production
is called the:
A. demand-oriented approach.
B. cost-oriented approach.
c. competitor-oriented approach.
D. value-oriented approach.
11. What is the primary goal of financial management?
A. To minimise the risk
B. To maximise the owner's wealth
c. To maximise the return
D. To raise profit
12. The finance manager is accountable for.
A. Earning capital assets of the company
B. Arranging financial resources
c. Effective management of a fund
D. Proper utilisation of funds
13. Which of the following is concerned with the acquisition, financing, and management
of assets with the business' overall goal in mind?
A. Profit maximization.
B. Agency theory
c. Financial management
D. Social responsibility
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14. Jensen and Meckling showed that _____
can assure themselves that the
_____
will make optimal decisions if there are appropriate incentives are given.
A. principals; agents
B. agents; principals.
c. principals; principals
D. agents; agents
15. Which of the following is concerned with the maximization of a firm's earnings after
taxes?
A. Profit maximization
B. Shareholder wealth maximization
c. Stakeholder maximization
D. Earnings Per Share maximization
16. Which of the following statements is correct regarding profit maximization as the
primary goal of the firm?
A. Profit maximization considers the firm's risk level.
B. Profit maximization will not lead to increasing short-term profits at the expense of
lowering expected future profits.
c. Profit maximization does consider the impact on individual shareholder's Earnings
Per Share.
D. Profit maximization is concerned more with maximizing net income than the stock
price.
17. Which of the following is concerned with the branch of economics relating the
behaviour of principals and their agents?
A. Financial management
B. Profit maximization
c. Social responsibility
D. Agency theory
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18. Which of the following is not included in working capital?
a) Inventory
b) Accounts payable
c) Accounts receivable
d) Rental income
e) None of the above
PARTB
1. Discuss any 2 elements of Financial Management
12 Marks
4 Marks
2. Consider the following characteristics:
8 Marks
a) Long run focus
b) Decisions show the direction that senior management want the organization to move
towards.
c) Short-term focus
d) Connects the short-term to the long-term goals
e) Example: enter a new business
f) Coordinates the activities of different departments towards one goal
g) User leans more on technical knowledge and skills
h) Considers people skills and psychological factors to influence changed behaviour.
i) Users can be guided by change in the environment and perceived threats and
opportunities.
Required:
Using the format below, arrange the above characteristic accordingly as characteristics of:
Strategy Formulation, Management Control or Task Control
Use the format:
Strategy
Formulation
List numbering (letter)
for the appropriate
characteristic here
Management
Control
List numbering (letter)
for the appropriate
characteristic here
Task Control
List numbering (letter)
for the appropriate
characteristic here
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Question 2
25 Marks
DX Lodges has savings of N$30,000 that they are considering investing in one of these
projects: Project X, which is aimed towards decorating accommodation chalets and Project
Y, aimed at improving entertainment experience of the guests at DX Lodges.
Due to limited financial resources, the two projects are mutually exclusive, and DX Lodges
cannot afford to invest in both projects. For this reason, this approached you for assistance
in choosing the right project to invest in. The projects have the following projected cash flow
streams. DX Lodges has a 12% cost of capital.
Project X
Project Y
YearO
-30,000
-30,000
Year 1
18,000
15,000
Year 2
8,000
13,000
Year 3
6,000
8,000
Year4
9,000
8,000
Required:
a) Use the NPV method to analyse each of these 2 projects and advise DX Lodges
on the best alternative investment, if the 2 projects are mutually exclusive.
15 Marks
b) Calculate the payback periods of each of the 2 projects and advise DX Lodges
on the best alternative investment, if the 2 projects are mutually exclusive.
6 Marks
c) Using their advanta~es and disadvantages, compare the NPV method to the
Payback period method of investment appraisal.
4 Marks
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Question 3
23 Marks
Brown Leatherx is a manufacturing company that produces leather products. The following
information is extracted from the company financial statements for the year ended
December 31, 2023:
1. The statement of profit or loss had the following details:
• Sales N$2,500,000
• Cost of Goods Sold: N$1,200,000
• Total operating Expenses: N$500,000
• Depreciation Expense: N$100,000
• Net Profit: N$530,000
2. Statement of Financial Position Accounts Beginning and Ending Balances)
Cash and cash equivalents
Accounts Receivable
Inventory
Accounts Payable
Long-Term Debt
Ordinary Share capital
Retained Earnings
Balance at the
beginning of
financial Year N$
100,000
200,000
300,000
180,000
400,000
500,000
300,000
Balance at the
end of financial
Year N$
250,000
250,000
400,000
150,000
300,000
500,000
380,000
3. Additional Information:
1. Dividends Paid: N$S0,000.
2. Brown Leatherx received an amount of N$10,000 for dividends received.
3. Purchases of Machinery: N$200,000.
4. Brown Leatherx sold a sewing machine for N$20,000, paid into the business
account. The sewing machine had a book value of N$20,000.
5. Proceeds from an issue of a long-term Loan from X Bank: N$100,000.
6. Cash Payments for Interest: N$45,000.
7. Received N$20,000 for interest received.
8. In 2023, Brown Leatherx paid N$125,000 for taxes.
Required:
Prepare the cash flow statement for Brown Leatherx for the year ended December 31, 2023.
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Question 4
22 Marks
MC Broadcasters provides video streaming services for entertainment in the Namibian
market. The Broadcaster has different plans, catering to different demographics. The business
is currently trying to improve the "Young G" plan, aimed towards catering to young
professionals. Based on experience, the business ascertains that at a price of N$60, annual
demand is 25,000 units. However, for every N$2 increase in selling price, demand is expected
to fall by 200 units. MC estimates
MC Broadcasters provided you with the cost information below at production level of 25,000
units:
Annual production (units)
25 000
Total Variable Costs
Fixed Overheads
N$ 525 000
N$ 80 000
Required:
a) Determine the equation for the demand function (that is, the price as a
function of quantity demanded. If P = a - bx, then MR= a - 2bx) 4 Marks
b) Determine the Marginal Cost (MC)
2 Marks
c) Find the quantity that maximises profit.
4 Marks
d) Calculate the optimum price
2 Mark
e) Compute the maximum profit
7 Marks
f) Explain what is meant by price elasticity of demand
3 Marks
END OF FIRSTOPPORTUNITY EXAMINATION
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PresentValueTable
Present value of 1 i.e. (1 + r)-n
Where
r = discount rate
n = number of periods until payment
Discountrate (r)
Periods
(n)
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
1 0·990 0·980 0·971 0·962 0·952 0·943 0·935 0·926 0·917 0·909
1
2 0·980 0·961 0·943 0·925 0·907 0·890 0·873 0·857 0·842 0·826
2
3 0·971 0·942 0·915 0·889 0·864 0·840 0·816 0·794 0·772 0·751
3
4 0·961 0·924 0·888 0·855 0·823 0·792 0·763 0·735 0·708 0·683
4
5 0·951 0·906 0·863 0·822 0·784 . 0·747 0·713 0·681 0·650 0·621
5
6 0·942 0·888 0·837 0·790 0·746 0·705 0·666 0·630 0·596 0·564
6
7 0·933 0·871 0·813 0·760 0·711 0·665 0·623 0·583 0·547 0·513
7
8 0·923 0·853 0·789 0·731 0·677 0·627 0·582 0·540 0·502 0-467
8
9 0·914 0·837 0·766 0·703 0·645 0·592 0·544 0·500 0-460 0-424
9
10 0·905 0·820 0·744 0·676 0·614 0·558 0·508 0-463 0-422 0·386 10
11 0·896 0·804 0·722 0·650 0·585 0·527 0-475 0-429 0·388 0·350 11
12 0·887 0·788 0·701 0·625 0·557 0-497 0-444 0·397 0·356 0·319 12
13 0·879 0·773 0·681 0·601 0·530 0-469 0-415 0·368 0·326 0·290 13
14 0·870 0·758 0·661 0·577 0·505 0-442 0·388 0·340 0·299 0·263 14
15 0·861 0·743 0·642 0·555 0-481 0-417 0·362 0·315 0·275 0·239 15
(n)
11% 12% 13% 14% 15% 16% 17% 18% 19% 20%
1 0·901 0·893 0·885 0·877 0·870 0·862 0·855 0·847 0·840 0·833
1
2 0·812 0·797 0·783 0·769 0·756 0·743 0·731 0·718 0·706 0·694
2
3 0·731 0·712 0·693 0·675 0·658 0·641 0·624 0·609 0·593 0·579
3
4 0·659 0·636 0·613 0·592 0·572 0·552 0·534 0·516 0-499 0-482
4
5 0·593 0·567 0·543 0·519 0·497 0-476 0-456 0·437 0-419 0-402
5
6 0·535 0·507 0-480 0-456 0-432 0-410 0·390 0·370 0·352 0·335
6
7 0-482 0·452 0-425 0-400 0·376 0·354 0·333 0·314 0·296 0·279
7
8 0-434 0-404 0·376 0·351 0·327 0·305 0·285 0·266 0·249 0·233
8
9 0·391 0·361 0·333 0·308 0·284 0·263 0·243 0·225 0·209 0·194
9
10 0·352 0·322 0·295 0·270 0·247 0·227 0·208 0·191 0·176 0·162 10
11 0·317 0·287 0·261 0·237 0·215 0·195 0·178 0·162 0·148 0·135 11
12 0·286 0·257 0·231 0·208 0·187 0·168 0·152 0·137 0·124 0·112 12
13 0·258 0·229 0·204 0·182 0·163 0·145 0·130 0·116 0·104 0·093 13
14 0·232 0·205 0·181 0·160 0·141 0·125 0·111 0·099 0·088 0·078 14
15 0·209 0·183 0·160 0·140 0·123 0·108 0·095 0·084 0·074 0·065 15
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