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    M1 M1 A1 M1 M1 A1 M1 A1 M1 M1 A1 M1 A1

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    M1 M1 A1 M1 M1 A1 M1 A1 M1 M1 A1 M1 A1

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    ABC

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    57 views3 pages

    M1 M1 A1 M1 M1 A1 M1 A1 M1 M1 A1 M1 A1

    Uploaded by

    theingioo
    ABC

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    © All Rights Reserved
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    of 3

    3003/4/11 Page 6 of 12

    MODEL ANSWER TO QUESTION 4Syllabus Topic 4: Profitability and liquidity (4.2) and (4.3)

    (a) Net purchases = Annual purchases – purchase returnsM1 = £84,590 - £2,305 = £82,285Cost of go
    £82,285 + £12,000 - £14,400 = £79,885A1 (b) Net sales = Annual sales - sales returns = £183,700 - £
    £79,885 = £99,835M1 Gross profit as a percentage of net sales = 100% x Gross profit / Net sales= 10
    of five expensesM1 = £9,360 + £540 + £1,030 + £8,650 + £8,600 = £28,180Overhead expenses as a p
    £28,180 / 179,720 = 15.7%A1 (d) Average stock = ½ x(£12,000 + £14,400) = £13,200M1 Average tim
    60.3 = 60 daysA1 (e) Net profit = gross profit – overhead expensesM1 = £99,835 - £28,180 = £71,65

    (Total 13 marks)

    3003/4/11 Page 7 of 12
    QUESTION 5

    Investment project A has a cost of £100,000 and a projected payback period of 3 years and 2 month
    Calculate the expected net cash inflow for investment project A in year 4.(3 marks)Investment proje
    net presentvalue for that year of £105,865.(b) Calculate the expected net cash inflow for investmen
    expected net cash inflow of £80,000 and an expected net presentvalue of £72,720.Calculate:(c) the
    calculation, showing your workings.(2 marks)Investment project B has a total expected net present
    £68,800 (-£68,800) at a rate of return of 11%.(e) Calculate the internal rate of return.(3 marks)

    (Total 12 marks)MODEL ANSWER TO QUESTION 5Syllabus Topic 5: Investment appraisal (5.2), (5.4) a

    (a) Still required to payback in year 4 = £100,000 – 3 x £30,000 = £10,000M1 Expected net cash inflo
    cash inflow = £105,865 / 0.683 = £155,000M1 A1 (c) Discount factor = £72,720 / £80,000 = 0.909M1
    = 10%A1r (e) Internal rate of return = 0.09 x (-£68,800) – 0.11 x (-£4,800) = 0.0885 = 8.85%M1 M1 A

    (Total 12 marks)

    3003/4/11 Page 8 of 12
    QUESTION 6
    Ursula is owed £7,400 by Trader X, who is declared bankrupt.Ursula finds she is an unsecured credit
    in the £ which is payable to unsecured creditors(2 marks)(b) the amount received by an unsecured
    unsecured creditor who is paid £2,880(2 marks)The total owed to unsecured creditors by Trader X i
    winding up the business are £5,260(d) Calculate the value of the trader’s assets achieved at liquidati
    liabilities before liquidation.(3 marks)

    (Total 12 marks)

    MODEL ANSWER TO QUESTION 6Syllabus Topic 6: Bankruptcy (6.2), (6.3) and (6.4)
    (a) Rate in the £ = £1 x £1,184 / £7,400 = £0.16M1 A1 (b) Creditor receives £5,750 x 0.16 = £920M1
    unsecured creditors = £220,500 x 0.16 = £35,280M1 Total assets = £35,280 + £26,000 + £5,260 = £6
    £246,500M1 Assets / liabilities = £66,540 / £246,500 = 0.2699 = 27%M1 A1
    (Total 12 marks)

    3003/4/11/MA Page 9 of 10 ©
    Education Development International plc 2011
    QUESTION 7

    A factory machine that costs £3,700,000 is expected to have a life of 6 years. The value of the mach
    years is calculated on the basis of the equal instalment method.Calculate:(a) the amount of depreci
    first year depreciation as a percentage of the original cost.(2 marks)After 3 years the method of dep
    calculatedon the basis of the diminishing balance method, with an annual rate of depreciation of 40
    amount of depreciation for year 4(2 marks)(e) the book value after 4 years(2 marks)(f) the scrap val

    (Total 13 marks)MODEL ANSWER TO QUESTION 7Syllabus Topic 7: Depreciation of Business Assets (

    (a) Depreciation over the first 3 years = £3,700,000 - £1,750,000 = £1,950,000M1 Depreciation in ea
    after 2 years = £3,700,000 – 2 x £650,000 = £2,400,000M1 A1 (c) First year depreciation percent = £
    year 4 = 40% x £1,750,000 = £700,000M1 A1 (e) Book value after 4 years = £1,750,000 - £700,000 =

    = £378,000M1 A1
    (Total 13 marks)

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