Q1. How should allocated and direct overheads be treated in an investment evaluation? Give reasons for your answer. (4 marks)

Q2. What are sunk costs? Explain with examples. Are they relevant in evaluating a project? Why or why not? (4 marks)

Q3. What are incidental impact or cannibalization effect? Explain their impact on a projects cashflows with examples. (4 marks)

Q4. What are the risks of i) excessive working capital; and ii) inadequate working capital? How would each of these impact the performance of an entity? (4 marks)

Q5. What do you understand by the terms i) Fixed or Permanent Working Capital ii) Variable or Temporary Working Capital (4 marks)