1.An investor hasthe choice between two investments. Investment Exe offers interest of 4% peryear compounded semi-annually for a period of three years. Investment Wyeoffers one interest payment of 20% at the end of its four-year life.
What is the annualeffective interest rate offered by the two investments?
Investment Exe Investment Wye
2.A project has an initial cash outflow of $12,000 followed by six equal annual cash inflows, commencing in one year’s time. The payback period is exactly four years. The cost of capital is 12% per year.
What is the project’s net present value (to the nearest $)?
3.The probability of an organisation making a profit of $180,000 next month is half the probability of it making a profit of $75,000.
What is the expected profit for next month?
4.Which of the following best describes a principal budget factor?
A.A factor that affects all budget centres.
B.A factor that is controllable by a budget centre manager.
C.A factor which limits the activities of an organisation.
D.A factor that the management accountant builds into all budgets
5.Which of the following best describes a flexible budget?
A.A budget which shows variable production costs only.
B.A monthly budget which is changed to reflect the number of days in the month.
C.A budget which shows sales revenue and costs at different levels of activity.
D.A budget that is updated halfway through the year to incorporate the actual results for the first half of the year.