$1.$ Roma is arranging for a party to be held in the students' union. The use of the hall will be free but security costs of $300$ will have to be met. The cost of the main band will be $2,500$ and the supporting band will cost $450.$ Tickets will be priced at $15$ each. On arrival, every ticket holder will be given a bottle of water, worth $1$ per bottle. What are the total fixed costs for this event?

A$)2,500$

B$)3,250$

C$)300$

D$)2,950$

$2.$ Ruby is looking at the results of a Capital Investment Appraisal. The report shows that, assuming a Cost of Capital of $10\%,$ investing in a plant to manufacture a new clothing line would give a positive NPV and an IRR of $23\%.$ Should the company buy the machine?

A$)$ Yes. NPV is positive and IRR is less than the Cost of Capital

B$)$ Yes. NPV is positive and IRR exceeds Cost of Capital.

C$)$ No$.$ NPV does not provide enough information.

D$)$ No$.$ IRR is higher than the Cost of Capital

$3.$ Based on the figures below, what is the current ratio?

$$

Inventory $5,000$

Trade Payables $12,000$

Trade Receivables $11,000$

Long term borrowings $($Non$-$current liabilities$)16,000$

Current portion of long$-$term loans $5,000$

Taxation payable $($within one year$)5,000$

Cash $4,000$

A$)0\mathrm{.}53$:$1$

B$)0\mathrm{.}91$:$1$

C$)2\mathrm{.}55$:$1$

D$)0\mathrm{.}77$:$1$

$4.$ Which of the following statements is NOT true?

A$)$ Financial accounting reports report on what has happened while management accounting reports focus on current activity and future projections.

B$)$ Financial accounting summarizes accounting data while management accounting breaks down costs into their detailed components.

C$)$ Financial accounting reports are aimed at internal users of accounting information while management accounting reports are aimed at external users of accounting information.

D$)$ Financial accounting reports are used by investors to make investment decisions while management accounting reports are used by managers to make business decisions.

The following information must be used to answer Questions $5-7$

Zyada Paisa Limited has $1,600,000$ to invest. The company is considering a few investment projects but only has sufficient cash to accept one of them.

The projected cash flows of the most likely $($project Sona$)$ are shown below. The directors have asked for your help and advice in reaching a decision on whether to accept this project.

The company requires that investments are required to achieve a minimum target of Accounting Rate of Return $($ARR$)$ of $18\mathrm{.}0\%$ and a maximum acceptable Payback period of $4$ years. The company$$s cost of capital is $9\%.$

Sona

Cash flows $000$

Initial investment $(800)$

Cash inflows year $1250$

Cash inflows year $2300$

Cash inflows year $3200$

Cash inflows year $4200$

Cash inflows year $5150$

Cash inflow from sale of the investment at the end of year $5100$

$5.$ Using the information above, what is the Payback period for project Sona $($Calculate to the nearest whole month$)?$

A$)2$ years $10$ months.

B$)3$ years $3$ months.

C$)3$ years $5$ months.

D$)2$ years $3$ months.

$6.$ Using the information above, what is the Accounting Rate of Return for project Sona? $($calculate to the nearest $1$ decimal place$)?$

A$)13\mathrm{.}8\%$

B$)48\mathrm{.}8\%$

C$)17\mathrm{.}8\%$

D$)30\mathrm{.}2\%$

$7.$ Using the information above, what is the Net Present Value for project Sona?

A$)75\mathrm{.}4$

B$)+75\mathrm{.}4$

C$)140\mathrm{.}4$

D$)+140\mathrm{.}4$

$8.$ Which one of the following statements is NOT true?

A$)$ Retained profits represent a free source of funds.

B$)$ The issuing of shares to raise finance can be expensive.

C$)$ Retained Earnings represents a very good external source of finance.

D$)$ Borrowing can increase the risk that a company faces.

$9.$ Porbandar plc is considering the investment in a project that has an initial cash outlay followed by a series of net cash inflows. The business applied the NPV and IRR methods to evaluate the proposal but, after the evaluation had been undertaken, it was found that the correct cost of capital figure was lower than that used in the evaluation.

What will be the effect of correcting for this error on the NPV and IRR figures?

Effect on NPV Effect on IRR

A Decrease Decrease

B Decrease No Change

C Increase No Change

D Increase Increase

$10.$ Which of the following statements most accurately describes the quick $($acid$-$test$)$ ratio?

A$)$ An assessment of short$-$term liquidity, which compares receivables and cash to current liabilities, without taking into account the inventories.

B$)$ An assessment of long$-$term solvency, which compares total assets to total liabilities.

C$)$ An assessment of short$-$term liquidity that compares inventory, receivables and cash to current liabilities.

D$)$ An assessment of long$-$term solvency, which compares short and long$-$term borrowings to total equity.