Aircraft leasing is a fixed cost for Helibeb Airlines plc.

The cost of leasing aircraft to fly 2,400 passengers per month between Glasgow and San Francisco is 800,000 per month.

What is the cost per month of leasing aircraft to fly 1,800 passengers per month between Glasgow and San Francisco?

Select one:

0

400,000

600,000

800,000

Franz-Joseph has calculated the expected discounted cash flows for a prospective expansion project using a discount rate of 6%.

He has determined that the project has a positive net present value and recommended that it proceeds.

However, Michael has now asked him to change the discount rate to 7.5%.

Will Franz-Joseph still recommend that the project proceeds.

Select one:

Yes

No

Maybe

He will recommend that the project proceeds with 80% of its originally planned capacity.

You are asked to evaluate an expansionproject which has an investment cost of 5 million, to be paid in cash before the project is completed.

If the project goes ahead, it will produce net cash inflows of 1.25 million per year.

What is the payback period for the project once it is completed?

Select one:

3 years.

4 years

It depends on the non-cash expenditure

It depends on the discount rate.

Project New Machine involves the acquisition of a new machine whichwill be held for 10 years and then sold for scrap.

The new machine costs 35 million.

The annual revenue generated by using the machine is 40 million.

The annual costs of using the machine are:

Labour 17 million

Materials 10 million

Maintenance 2 million

Power 4 million

Depreciation of the Machine 3 million

Other Costs 2 million

What is the accounting rate of return for Project New Machine?

Select one:

5.71%

10.00%

14.29%

25.00%

Your new factory will generate a net cash inflow of 10 million in Year 3 of its operations (the third year after its construction).

Your discount rate for investment appraisal purposes is 10%.

What is the net present value of the net cash inflow for Year 3?

Select one:

a.10,000

b.7 million

c.7.51 million

d.13.31 million