Academic Excellence Tutorial

Acc 205 Mock Exam

1) A firm plans to invest N100,000 on a project. The firm's Payback period is 3 year,the firm
expects the following cash inflow for 4 years:
Year 1 N30,000
Year 2 N35,000
Year 3 N25,000
Year 4 N40,000

You are required to use PAYBACK PERIOD to check the viability of the project.

2) explain the following terms :

(A) payback period
(B) Accounting rate of return
(C) Net present value
(D) capital budgeting.

3) state the decision rule for the following methods of appraisal:

(A) payback period
(B) accounting rate of return
(C) net present value
(D) profitability index.

4) A firm plans to invest N1,000,000 on a project. The firm's TARGET ARR is 20%,the firm
expects the following cash inflow for 4 years:
Year 1 N300,000
Year 2 N350,000
Year 3 N250,000
Year 4 N400,000

You are required to use ACCOUNTING RATE OF RETURN to check the viability of the
project(assuming scrap value is N200,00 and tax rate is 30%)

5) A firm plans to invest N100,000 on a project. The firm's cost of capital is 10% the firm expects
the following cash inflow for 4 years:
Year 1 N30,000
Year 2 N35,000
Year 3 N25,000
Year 4 N40,000

You are required to use NET PRESENT VALUE to check the viability of the project.