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FMH810S-FINANCIAL MANAGEMENT HOSPITALITY AND TOURISM-2ND OPP- JULY 2024 |
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nAmlBIA UnlVERSITY
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF COMMERCE, HUMAN SCIENCEAND 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
EXAMINERS:
SECOND OPPORTUNITY EXAMINATION QUESTION PAPER
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 3 PAGES (Excluding this front page)
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Question 1
25 Marks
X Unlimited can sell 2,000 units of product X at the price of N$300. If the business increased
its selling price to N$400, the demand would fall to 1,000 units. According to business records,
product X has a variable cost of N$30 per unit and the business has monthly fixed costs of
N$15 000 per month.
Requirement:
a} Using the price function, calculate the 'b' variable.
2 Marks
b} Using the price function, calculate the 'a' variable.
3 Marks
c} Use the above variables to write the price function of quantity demanded for Product
X.
2 Marks
d} Write down the marginal revenue function.
2 Marks
e} How much is the marginal cost for Product X?
2 Marks
f} Find the quantity that maximises profit.
3 Marks
g) Calculate the price at the level that maximises profit.
3 Marks
h} How much is maximum profit?
4 Marks
i) Discuss the pricing strategie of price differentiation and premium pricing. 4 Marks
Question 2
15 Marks
Gondwana Collection Namibia, is a hub of travel and safari in Namibia and also offers rental
cars and accommodation (hotel, lodges, campsite and self-catering}. One of the key
responsibilities of management is to implement a new management control system (MCS}
within the organisation towards incorporating technology into their operations and improving
productivity. You are tasked to advise them on certain key areas that are needed to be done
to successful execution.
Answer the following questions:
Required:
a} Explain the meaning of the term task control.
3 Marks
b) Discuss any 2 elements of financial management.
4 Marks
c} Give 4 key differences between strategy formulation and management control.
8 Marks
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Question 3
10 Marks
ABC Beverages manufactures and sells a popular soft drink brand called "Fizzy." Over the past
few months, the marketing team at ABC Beverages has observed a decline in sales revenue
for Fizzy. Concerned about this trend, the management team has tasked your department
with conducting a thorough analysis to understand the factors contributing to the decline in
sales.
The marketing team has provided you with the following data:
-At the normal Price of N$1.50 per can, the company sold a quantity of 10,000 cans per week.
- However, after a price increase to $1.80 per can, the quantity sold decreased to 8,000 cans
per week.
Answer the following questions:
a} Use the above information to calculate the price elasticity of demand for Fizzy.
4 Marks
b} Interpret Fizzy's price elasticity of demand.
2 Marks
c) Name and explain 2 factors that may influence the price elasticity of demand for Fizzy.
4 Marks
Question 4
30 marks
JJ Lodges is considering two projects. The projects are similar in nature and are expected both
operate for four years. Due to the unavailability of funds to undertake both of them, only one
project can be accepted. The cost of capital is 12%.
The following information is available:
Initial investment
Year 1
Year 2
Year 3
Year 4
Estimated scrap value at the end of year 4
Expected Cashflows
Project A
Project B
N$
N$
46 000
46000
6 500
4 500
3 500
2 500
13 500
4 500
{1 500)
14 500
4 000
4000
Depreciation is charged on a straight-line basis.
Required:
Calculate the following for both projects:
a} The payback period {answer rounded off to one decimal place)
8 Marks
b} The net present value (NPV).
8 Marks
c) The accounting rate of return {ARR}on the initial investment {round off your answer
to one decimal place).
4 Marks
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d) If the two projects are mutually exclusive, discuss which project should be chosen
based on all three methods.
4 Marks
e) List three advantages of the payback period and three advantages of accounting rate
of return methods of capital appraisal.
6 Marks
Show all your workings!
Question 5
20 Marks
The following information relate to the activities of ZEE Corporation for the year ended
December 31, 2023:
ZEE Corporation is a manufacturing company that produces electronic devices. Over the
course of the year, the company experienced the following various financial activities that
impacted its cash flow.
1. At the beginning of the financial year, ZEECorporation had a cash balance of $50,000.
2. The company generated a net profit of $100,000 from its operations.
3. ZEE Corporation recorded $20,000 in depreciation expense, which represents the
allocation of the cost of its equipment over time.
4. Over the year, the company's accounts receivable increased by $10,000, indicating that
more sales were made on credit during the year.
5. The company recorded interest expense of N$6,000 in the income statement for the
year.
6. ZEECorporation also invested $5,000 to increase its inventory levels and meet customer
demands.
7. As a commitment to improve working capital, the company paid off $8,000 of its
accounts payable, reducing its short-term liabilities.
8. Zee Corporation paid interest amounting to N$4,000 during the period
9. The company received interest of N$2,500 from XY Bank
10. ZEE Corporation invested $50,000 in purchasing new equipment to improve its
manufacturing processes and expand production capacity.
11. The company generated $15,000 from the sale of certain investments it held.
12. ZEECorporation raised $30,000 by issuing new ordinary shares to investors.
13. The company paid $20,000 in dividends to its shareholders.
14. Zee Corporation received N$5,000 in dividends
Required:
Prepare the cashflow statement for ZEECorporation for the year ended December 31, 2023.
*End of Second Opportunity Exam*
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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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