Series 4 Examination 2010 - 3003 Thur 1811.pdf

8/12/2019 Series 4 Examination 2010 - 3003 Thur 1811.pdf

1/7

ICCIffi

Series 4 Examination

2010

CERTIFICATE

IN

ADVANCED

BUSINESS

CALCULATIONS

Level 3

Thursday

18 November

Subject

Code:

3003

Time

allowed: 3

hours

INSTRUCTIONS

FOR GANDIDATES

.

Answer

all

I

questions.

.

Write

your

answers

in blue

or

black

inUballpoint.

Pencil

may

be used

only

for

graphs,

charts,

diagrams,

etc.

'

All answers

must

be

correcfly

numbered

but

need

not be

in numerical

order.

.

Workings

must

be

shown.

.

You must

show

all calculations, where

applicable

on

the answer

paper

provided.

.

You may use

mathematical statisticaltables.

.

Your

work should

be

accurate

and

neat.

.

Your may

use

a

calculator

provided

the

calculator

gives

no

printout,

has

no

word

display facilities,

is

silent

and

cordless.

The

provision

of batteries

and

their condition

is

your

responsibility.


2/7

QUESTION

1

During a

period

of

economic

contraction,

two

investors

are

affected

as

follows:

(a)

The value of

the

house

belonging

to

investor

A falls in

value

at

a

rate of 10%

per

annum

for

2

years.

ln each

year

the

percentage

is

calculated on

the

value

at

the

start

of

the

year.

lf

the

value

of

the

house

is

8250,000 at

the start

of

the

period,

calculate

the

value

of

the house

after

2 years.

(3

marks)

(b)

lnvestor

A

is

interested

to

know

the

effect

on

a

250,000 house

of

a

reduction

in value

of 1Oo/o

each

yearfor

30

years.

Using

the

compound

interest

formula,

calculate

the

value

of

the house

after

30

years.

(3

marks)

(c)

The

value

of

a

unit

trust

purchased

by investor B falls

from

t172

per

unit to 8144

per

unit

in

2.5

years.

Calculate:

(i)

the reduction

in

value as

a

percentage

per

annum

based

on

simple

interest.

(3

marks)

(ii)

the reduction

in

value

as

a

percentage

perannum

based

on

compound interest.

(4

marks)

(Total

13 marks)

QUESTION

2

8100

of 2.5Yo

Government Stock

can

be

bought for f 83.75

(a)

A

bank invested

8209,375

in

the

stock.

Calculate

the

nominal

value of

stock

bought

by the

bank.

(2

marks)

The bank

held

the stock

for 3

years.

(b)

Calculate:

(i)

the

total interest

received.

(2

marks)

(ii)

the

percentage yield,

giving

your

answer

to

the

nearest

whole number

percent.

(3

marks)

(c)

A second bank bought some

of

the same

stock

with a nominal value

of 320,OOO. How

much

did

they

pay

for

it?

(2

marks)

The bank

could

have

purchased

1225,000

of debenture

stock

for tZO},ZSO.

(d)

Calculate

the

cost

of C100

of

the

debenture

stock.

(2

marks)

(Total

11

marks)


3/7


4/7

QUESTION

5

A

business

owner has

a

choice

of

2

investment

projects.

The

estimated

costs

and

returns

are as follows:

Proiect

P

Proiect

Q

Cost 350,OOO

375,000

Year 1 cash

inflow

65,000

(50,OOO)

(outflow)

Year

2

cash inflow

160,000

2OO,0OO

Year

3

cash

inflow

150,000

200,000

Year

4

cash

inflow

170,000

15O,OOO

(a)

For

Project

Q,

calculate

the

payback

period.

Give

your

answer

in

years

and

months.

(4

marks)

The

payback

period

for Project

P

is 2

years

10

months.

(b)

(i)

On

the

basis

of

payback

period,

advise

the

business

owner

which

project

is the

better

investment.

(1

mark)

(ii)

Give

a

reason

for

your

advice in

(b)(i).

(1

mark)

(c)

Using

the

following

table of

discount

factors, calculate

the net

present

value

for

Project

Q.

Discounting

factor

Year 1

0.917

Year

2

0.842

Year 3

0.772

Year 4

0.708

(4

marks)

(d)

John

says

that

the

table

of

discount

factors

is

based

on

the requirement

to make

a return

al 10%

per

annum,

while

Jill

says

that

the

figure is

9%.

(i)

State

which of

them

is

right.

(1

mark)

(ii)

Provide

a

calculation

to confirm

your

answer in

(d)(i)

(1

mark)

(Total

12

marks)

{


5/7

QUESTION

6

(a)

ln

bankruptcy X,

unsecured creditors receive E0.60 in

the

pound.

A lender

is

owed 8120,000, of

which

50% is secured

against

assets.

Calculate the

amount

received

by

the lender.

(3

marks)

(b)

ln bankruptcy

Y:

the

total liabilities

are

e566,000

the

amount

owed

to unsecured creditors

is

8313,500,

and

an unsecured

creditor who

is

owed

77,000

receives

835,000.

Calculate

the total assets

available

for

creditors.

(4

marks)

(c)

Felipe

is

owed money in

two bankruptcies,

A and

B.

ln

each case

he is

an unsecured

creditor.

He is owed

825,000 in bankruptcy

A

that

pays

f0.32

in

the

pound

to unsecured

creditors.

He is

also

owed

44,000 in bankruptcy

B.

ln bankruptcy

B

an unsecured

creditor who is

owed f 10,000

is

paid

f4,100.

Calculate

how

much Felipe

receives in total.

(3

marks)

(Total

10

marks)


6/7

QUESTION

7

A trader buys

machinery

costing

t19,900.

He

expects it

will

last

for

7

years

and

have

a scrap

value

of

81,000.

He

uses

the straight

line

(equal

instalments) method of

depreciation and depreciates

by

a

full

year

in the

year

of

purchase

and nothing

in

the

year

of

disposal.

(a)

Prepare

the

depreciation schedule for

the first 3

years

to show annual depreciation,

accumulated

depreciation,

and the book

value

at

the end

of

each

year.

(5 marks)

After

3

years,

the

trader reconsiders

the lifetime

of

the machine.

He now

believes that

new

developments

in

technology

mean

that it

must

be

replaced

in

a

further two

years,

at

which time

it

will

have

a

scrap value

of E1,500. He

recalculates

the depreciation for

the

fourth

and

fifth

years,

again

using

the straight

line

method,

(b)

Calculate:

(i)

the revised amount of

depreciation

for

year

4

(2

marks)

(ii)

the increase in

annual

depreciation from

year

3

to

year

4

(2

marks)

After

the

fourth

year,

the

trader

is

declared bankrupt,

and

the

machine

is

sold

for f2,500

to

raise money

to

pay

creditors.

(c)

Calculate the

loss

recorded

on

the sale

of

the

machine.

(3

marks)

The E2,500

received for

the

machine increases the amount

paid

to

unsecured

ereditors

from E0.30 in the

pound

to

f0.35

in the

pound.

(d)

Calculate the

total amount

owed

to unsecured

creditors.

(3

marks)

(Total

l5

marks)


7/7

QUESTION 8

(a)

Company

C sold

4,450

monitors in

year

2008

and

5,162

monitors

in

year

2009.

Calculate

the

quantity

relative

for

year

2009

with

2008 as

the

base

year.

(2

marks)

(b)

The

number

of monitors sold

by

Company

C

fell by

11Yo lrom

year

2007 to

year

2008.

(i)

Express

the

quantity

sold

in

2008

as

a

quantity

relative

based on

year

2007.

(2

marks)

(ii)

Calculate

the number

of

monitors

sold

in

2007.

l-

'

i.

*.'i

T,,:

6{i

(2

marks)

(c)

ln

year

2009

Company

C

cut

the

price

of

its

monitors

by

10%

of

the

year

2008

price.

Express

the

income

from

sales

of monitors in

2009

as

an index, based

on

the

income

from

sales

of monitors

in

year

2008

=

100.

(2

marks)

(d)

The

cost of

components

for the

monitors sold

by

Company

C

was

as

follows:

2008

E56

per

monitor

2009

E60

per

monitor

Calculate the

average cost

of

components

per

monitor sold

in the

period

2008

to

2009

inclusive.

(4

marks)

(Total

12

marks)

Series 4 Examination 2010 - 3003 Thur 1811.pdf

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