APF2632 Public Sector Financial Management B Assignment Sem 2, 2025 | UNAM

APF2632 ASSIGNMENT SUBMISSION INFORMATION:

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APF2632 Assignment

Question 1 (18 marks)

There are several factors that leads to enormous increase in public expenditure through the years

Required:
Discuss what do you think are the Causes for increase in government expenditures.

Question 2 (20 marks)

Among the non-tax sources, the major source of revenue of the government is public debt. That is, borrowing. It may either be internal or external debts.

Required:
2.1 Why do you think governments find it necessary to borrow? (10 marks)
2.2 What conditions do you think should be put in place before the country borrows money? (10 marks)

Question 3 (32 marks)

NamPower is an electrical company owned by Namibian government. Its management has limited funds and has to choose between two projects for the expansion of rural electrification: Project D and Project T.

The following details apply:

• Project D has a three-year lifespan
• Project T has a two-year lifespan
• The company's weighted average cost of capital is 10% The estimated cash flows for each period are shown below:

Required:

(a) Calculate the net present value of each project and its internal rate of return.
(8 marks)
(b) Briefly explain what is meant by the term ‘internal rate of return' and describe how management uses this measure to make capital budgeting decisions. (2 marks)
(c) Can management decide on the best project using your answers in (a) above? Support your answer with a brief explanation which should cover, among other things, the definition of replacement chains. (10 marks)
(d) Which project would you recommend to management? Support your opinion with relevant calculations. (12 marks)