Question 25

The projected net cash flows for an investment are:

Year 0

1

2

3

4

5

-850,000

130,000

200,000

300,000

200,000

150,000

The net present value of the investment, assuming a 7% cost of capital is:

Question 25 options:

a)

Positive $801,000

b)

Negative $801,000

c)

Positive $49,000

d)

Negative $49,000

Question 26

A company's annual sales budget is for 120,000 units, spread equally through the year. It needs to have one and a half months stock at the end of each month. If opening stock is 12,000 units, the number of units to be produced in the first month of the budget year is:

Question 26 options:

a)

10,000

b)

12,000

c)

13,000

d)

15,000

Question 27

The standard costs for a manufacturing business are $12 per unit for direct materials, $8 per unit for direct labor and $5 per unit for manufacturing overhead. The sales projection is for 5,000 units, 3,500 units need to be in stock at the end of the period and 1,500 units are in stock at the beginning of the period. The production budget will show costs for that period of:

Question 27 options:

a)

175,000

b)

150,000

c)

140,000

d)

125,000

Question 28

Debtors increase by $15,000 and creditors increase by $11,000. The effect on cash flow of the change in working capital is an:

Question 28 options:

a)

increase of $4,000

b)

decrease of $4,000

c)

increase of $26,000

d)

decrease of $26,000