QUESTION 1

On account A, the rate of interest is 5% per annum.

(a)

Based on dividing the amount of interest equally between the first and second halves of the
year, state the rate of interest for a 6-month period (simple interest method).
(1 mark)

(b)
on the same2011
proportional increase in the amount over the first and second halves
Series 4Based
Examination
of the year, calculate the rate of interest for a 6-month period (compound interest method).
(2 marks)
On
accounts B and C, theIN
rate ADVANCED
of interest is 3% per half
year.
CERTIFICATE
BUSINESS

CALCULATIONS

(c)
Level 3On account B, based on a rate of interest of 3% per half year, calculate the simple interest
on 500 over a period of 4 years.
(2 marks)

Thursday 10 November
(d)

On account C, based on a rate of interest of 3% per half year, calculate the compound

(e)

On account C, express the increase in value over 4 years as an index.

Subjectinterest
code:on
3003
500 over a period of 4 years.

(4 marks)

Time allowed: 3 hours

(2 marks)
(Total 11 marks)

INSTRUCTIONS FOR CANDIDATES

QUESTION 2

Answer all 8 questions.

Sinita bought unit trusts and invested for income. She invested 42,000 in a unit trust with an offer price

of 75 per
unit,
andanswers
sold theinunits
3 years
at the samePencil
price. may
During
this period
shegraphs,
received
income
Write
your
blueafter
or black
ink/ballpoint.
be used
only for
charts,
from thediagrams,
units of 9,744.
etc. This income was not reinvested in units.

All answers must be correctly numbered but need not be in numerical order.
Calculate:

(a)

Workings
be shown.
the numbermust
of units
purchased

(b)

Youpercentage
must showyield
all calculations,
the
per annum where applicable on the answer paper provided.

(c)

You(3may
useincome
mathematical
the
year)
per unit.statistical tables.

(2 marks)
(3 marks)
(2 marks)

Your work should be accurate and neat.

Sinita had to pay the following charges:

Your may use a calculator provided the calculator gives no printout, has no word display facilities,
is silent and cordless. The
provision
of batteries
andsum
theirinvested
condition is your responsibility.
Fee on
purchase:
0.2% of the
Fee on sale: 0.3% of the sum received
Fund management fees of 525
Calculate:
(d)

the total charges paid

(e)

the total charges as a percentage of the original investment

(f)

Sinitas income net of fees.

(2 marks)
(2 marks)
(2 marks)
(Total 13 marks)

3003/4/11

Page
Page 12 of
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ASE 3003 4 11 1

QUESTION 3
Thomas draws a break-even chart.
To represent sales, he draws a straight line through the origin and the point (10,000 units, 66,000).
Calculate:
(a)

the selling price per unit of product

(b)

the income from sales of 12,000 units.

(2 marks)
(2 marks)
To represent total manufacturing costs, Thomas draws a line through the points (0 units, 20,000) and
(10,000 units, 70,000).
Calculate:
(c)

the variable cost per unit

(d)

the contribution per unit

(e)

the total cost of manufacturing 12,000 units

(f)

the number of units manufactured and sold to achieve break-even.

(3 marks)
(2 marks)
(3 marks)
(2 marks)
(Total 14 marks)

QUESTION 4
The following information relates to a retailers business at the end of the first year of trading.

183,700
84,590
3,980
2,305
12,000
14,400
9,360
540
1,030
8,650
8,600

Annual sales
Annual purchases
Sales returns
Purchases returns
Initial stock value
Final stock value
General expenses
Postage
Telephone & Internet
Advertising
Vehicle expenses

Calculate:
(a)

the cost of goods sold

(b)

gross profit as a percentage of net sales

(c)

overhead expenses as a percentage of net sales

(d)

the average length of time that items remained in stock, giving your answer in days

(e)

the net profit.

(3 marks)
(3 marks)
(2 marks)
(3 marks)
(2 marks)
(Total 13 marks)

3003/4/11

Page 3 of 5

QUESTION 5
Investment project A has a cost of 100,000 and a projected payback period of 3 years and 2 months.
The expected net cash inflow in the first 3 years is 30,000 per year.
(a)

Calculate the expected net cash inflow for investment project A in year 4.
(3 marks)

Investment project B has a discount factor for a particular year of 0.683 and an expected net present
value for that year of 105,865.
(b)

Calculate the expected net cash inflow for investment project B for that year.
(2 marks)

In year 1, investment project B has an expected net cash inflow of 80,000 and an expected net present
value of 72,720.
Calculate:
(c)

the discount factor used for year 1

(d)

the rate of return used in the calculation, showing your workings.

(2 marks)
(2 marks)
Investment project B has a total expected net present value of negative 4,800 (-4,800) at a rate of
return of 9% and negative 68,800 (-68,800) at a rate of return of 11%.
(e)

Calculate the internal rate of return.

(3 marks)
(Total 12 marks)

QUESTION 6
Ursula is owed 7,400 by Trader X, who is declared bankrupt.
Ursula finds she is an unsecured creditor and eventually receives only 1,184 in payment.
Calculate:
(a)

the rate in the which is payable to unsecured creditors

(b)

the amount received by an unsecured creditor who is owed 5,750

(c)

the amount owed to an unsecured creditor who is paid 2,880

(2 marks)
(2 marks)
(2 marks)
The total owed to unsecured creditors by Trader X is 220,500
He also owes 26,000 to secured creditors
The expenses of winding up the business are 5,260
(d)

Calculate the value of the traders assets achieved at liquidation.

(e)

Express this value of the assets as a percentage of the liabilities before liquidation.

(3 marks)
(3 marks)
(Total 12 marks)

3003/4/11

Page 4 of 5

QUESTION 7
A factory machine that costs 3,700,000 is expected to have a life of 6 years. The value of the machine
after 3 years is estimated to be 1,750,000.
Depreciation for the first 3 years is calculated on the basis of the equal instalment method.
Calculate:
(a)

the amount of depreciation each year

(b)

the book value after 2 years

(c)

the first year depreciation as a percentage of the original cost.

(3 marks)
(2 marks)
(2 marks)
After 3 years the method of depreciation is changed. From that point onward, depreciation is calculated
on the basis of the diminishing balance method, with an annual rate of depreciation of 40% of the
machines value at the start of that year.
Calculate:
(d)

the amount of depreciation for year 4

(e)

the book value after 4 years

(f)

the scrap value after 6 years.

(2 marks)
(2 marks)
(2 marks)
(Total 13 marks)

QUESTION 8
Three investments, A, B and C, are grouped into a single fund with weightings of 145, 156 and 99
respectively. Over a period of 4 years they increase in value, with each increase expressed as an index,
as shown in the following table:

(a)

Investment

Index

A
B
C

154
145
130

Weighting
145
156
99

Calculate the composite (weighted) index for the three investments combined.
(5 marks)

A second fund includes the same three investments, A, B and C, together with a fourth investment D.
The weightings of investments A, B and C are as above, and the weighting of investment D is 50.
Over the same period, the weighted index of the four investments combined is 141.6.
(b)

Calculate the index representing the increase in value of investment D, over the four-year
period.
(5 marks)

(c)

Working on the basis of simple interest, calculate the percentage increase per annum in
investment A over the period.
(2 marks)
(Total 12 marks)

3003/4/11

Page 5 of 5

Education Development International plc 2011