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3 marksCapital Budgeting and Investment Appraisal

CAPE Accounting Unit 2 · 2013 · Paper 2 · Question 3(c)(iii)

Project appraisal techniques: include what the technique seeks to achieve, how the decision is made, and one piece of information required for calculation.

Explain the net present value (NPV) project appraisal technique.

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Other parts of this question

  1. 3(a)(i)Calculate the contribution margin ratio.[2 marks]
  2. 3(a)(ii)Calculate the number of tickets that must be sold to break even in units and in dollars.[3 marks]
  3. 3(a)(iii)Calculate the number of tickets that must be sold to earn a target profit of $50 000.[2 marks]
  4. 3(b)Identify four non-financial factors that can influence Fanciful Enterprises' ticket pricing decision.[4 marks]
  5. 3(c)(i)Explain the payback period project appraisal technique.[3 marks]
  6. 3(c)(ii)Explain the internal rate of return (IRR) project appraisal technique.[3 marks]
  7. 3(d)(i)Compute the labour rate variance.[4 marks]
  8. 3(d)(ii)Compute the labour efficiency variance.[4 marks]
  9. 3(d)(iii)Compute the material price variance.[3 marks]
  10. 3(d)(iv)Compute the material quantity variance.[4 marks]

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