Questions: Respond to all questions. Please be sure of your responses.

On 1 September 2005, a company placed part of its assets with two fund managers. Manager P was given $80,000 and Manager O was given $140,000. Both managers received a net cashflow of $15,000 on 1 September 2006, bringing their total fund values to f103,000 and f183,000, respectively. A further net cashflow of $20,000 was received by each manager on 1 September 2007. This brought their total fund values to f143,600 and $239,600, respectively. On 31 August 2008, the value of Manager P's fund was $172,320 and the value of Manager O's fund was $263,560. (i) For the period from 1 September 2005 to 31 August 2008, calculate for each fund manager: (a) the time weighted rate of return ( b ) the money weighted rate of return. [8] (ii) By examining the growth factors between cashflows, describe the performance of each manager over the three-year period. Hence, explain why the money- weighted rate of return for Manager P is higher than that of Manager Q. [3] (iii) Comment briefly on the relative performance of the two fund managers. [2] [Total 13]11 Company A has invested in Company B. Explain how the directors of Company A can determine whether Company B is a subsidiary for reporting purposes. [5] 12 Describe how probability trees are used in capital project appraisal. [5] 13 Describe the role of the external auditor in financial reporting. [5] 14 Explain how market forces would discipline the managers of a quoted company if they were not performing in a satisfactory manner. [5] 15 The partners in a small business are considering becoming a limited company. Explain the difference in the taxation of a partnership and a limited company. [5]