series 4 examination 2010 - 3003 thur 1811.pdf
TRANSCRIPT
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8/12/2019 Series 4 Examination 2010 - 3003 Thur 1811.pdf
1/7
ICCIffi
Series 4 Examination
2010
CERTIFICATE
IN
ADVANCED
BUSINESS
CALCULATIONS
Level 3
Thursday
18 November
Subject
Code:
3003
Time
allowed: 3
hours
INSTRUCTIONS
FOR GANDIDATES
.
Answer
all
I
questions.
.
Write
your
answers
in blue
or
black
inUballpoint.
Pencil
may
be used
only
for
graphs,
charts,
diagrams,
etc.
'
All answers
must
be
correcfly
numbered
but
need
not be
in numerical
order.
.
Workings
must
be
shown.
.
You must
show
all calculations, where
applicable
on
the answer
paper
provided.
.
You may use
mathematical statisticaltables.
.
Your
work should
be
accurate
and
neat.
.
Your may
use
a
calculator
provided
the
calculator
gives
no
printout,
has
no
word
display facilities,
is
silent
and
cordless.
The
provision
of batteries
and
their condition
is
your
responsibility.
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8/12/2019 Series 4 Examination 2010 - 3003 Thur 1811.pdf
2/7
QUESTION
1
During a
period
of
economic
contraction,
two
investors
are
affected
as
follows:
(a)
The value of
the
house
belonging
to
investor
A falls in
value
at
a
rate of 10%
per
annum
for
2
years.
ln each
year
the
percentage
is
calculated on
the
value
at
the
start
of
the
year.
lf
the
value
of
the
house
is
8250,000 at
the start
of
the
period,
calculate
the
value
of
the house
after
2 years.
(3
marks)
(b)
lnvestor
A
is
interested
to
know
the
effect
on
a
250,000 house
of
a
reduction
in value
of 1Oo/o
each
yearfor
30
years.
Using
the
compound
interest
formula,
calculate
the
value
of
the house
after
30
years.
(3
marks)
(c)
The
value
of
a
unit
trust
purchased
by investor B falls
from
t172
per
unit to 8144
per
unit
in
2.5
years.
Calculate:
(i)
the reduction
in
value as
a
percentage
per
annum
based
on
simple
interest.
(3
marks)
(ii)
the reduction
in
value
as
a
percentage
perannum
based
on
compound interest.
(4
marks)
(Total
13 marks)
QUESTION
2
8100
of 2.5Yo
Government Stock
can
be
bought for f 83.75
(a)
A
bank invested
8209,375
in
the
stock.
Calculate
the
nominal
value of
stock
bought
by the
bank.
(2
marks)
The bank
held
the stock
for 3
years.
(b)
Calculate:
(i)
the
total interest
received.
(2
marks)
(ii)
the
percentage yield,
giving
your
answer
to
the
nearest
whole number
percent.
(3
marks)
(c)
A second bank bought some
of
the same
stock
with a nominal value
of 320,OOO. How
much
did
they
pay
for
it?
(2
marks)
The bank
could
have
purchased
1225,000
of debenture
stock
for tZO},ZSO.
(d)
Calculate
the
cost
of C100
of
the
debenture
stock.
(2
marks)
(Total
11
marks)
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8/12/2019 Series 4 Examination 2010 - 3003 Thur 1811.pdf
3/7
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8/12/2019 Series 4 Examination 2010 - 3003 Thur 1811.pdf
4/7
QUESTION
5
A
business
owner has
a
choice
of
2
investment
projects.
The
estimated
costs
and
returns
are as follows:
Proiect
P
Proiect
Q
Cost 350,OOO
375,000
Year 1 cash
inflow
65,000
(50,OOO)
(outflow)
Year
2
cash inflow
160,000
2OO,0OO
Year
3
cash
inflow
150,000
200,000
Year
4
cash
inflow
170,000
15O,OOO
(a)
For
Project
Q,
calculate
the
payback
period.
Give
your
answer
in
years
and
months.
(4
marks)
The
payback
period
for Project
P
is 2
years
10
months.
(b)
(i)
On
the
basis
of
payback
period,
advise
the
business
owner
which
project
is the
better
investment.
(1
mark)
(ii)
Give
a
reason
for
your
advice in
(b)(i).
(1
mark)
(c)
Using
the
following
table of
discount
factors, calculate
the net
present
value
for
Project
Q.
Discounting
factor
Year 1
0.917
Year
2
0.842
Year 3
0.772
Year 4
0.708
(4
marks)
(d)
John
says
that
the
table
of
discount
factors
is
based
on
the requirement
to make
a return
al 10%
per
annum,
while
Jill
says
that
the
figure is
9%.
(i)
State
which of
them
is
right.
(1
mark)
(ii)
Provide
a
calculation
to confirm
your
answer in
(d)(i)
(1
mark)
(Total
12
marks)
{
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8/12/2019 Series 4 Examination 2010 - 3003 Thur 1811.pdf
5/7
QUESTION
6
(a)
ln
bankruptcy X,
unsecured creditors receive E0.60 in
the
pound.
A lender
is
owed 8120,000, of
which
50% is secured
against
assets.
Calculate the
amount
received
by
the lender.
(3
marks)
(b)
ln bankruptcy
Y:
the
total liabilities
are
e566,000
the
amount
owed
to unsecured creditors
is
8313,500,
and
an unsecured
creditor who
is
owed
77,000
receives
835,000.
Calculate
the total assets
available
for
creditors.
(4
marks)
(c)
Felipe
is
owed money in
two bankruptcies,
A and
B.
ln
each case
he is
an unsecured
creditor.
He is owed
825,000 in bankruptcy
A
that
pays
f0.32
in
the
pound
to unsecured
creditors.
He is
also
owed
44,000 in bankruptcy
B.
ln bankruptcy
B
an unsecured
creditor who is
owed f 10,000
is
paid
f4,100.
Calculate
how
much Felipe
receives in total.
(3
marks)
(Total
10
marks)
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8/12/2019 Series 4 Examination 2010 - 3003 Thur 1811.pdf
6/7
QUESTION
7
A trader buys
machinery
costing
t19,900.
He
expects it
will
last
for
7
years
and
have
a scrap
value
of
81,000.
He
uses
the straight
line
(equal
instalments) method of
depreciation and depreciates
by
a
full
year
in the
year
of
purchase
and nothing
in
the
year
of
disposal.
(a)
Prepare
the
depreciation schedule for
the first 3
years
to show annual depreciation,
accumulated
depreciation,
and the book
value
at
the end
of
each
year.
(5 marks)
After
3
years,
the
trader reconsiders
the lifetime
of
the machine.
He now
believes that
new
developments
in
technology
mean
that it
must
be
replaced
in
a
further two
years,
at
which time
it
will
have
a
scrap value
of E1,500. He
recalculates
the depreciation for
the
fourth
and
fifth
years,
again
using
the straight
line
method,
(b)
Calculate:
(i)
the revised amount of
depreciation
for
year
4
(2
marks)
(ii)
the increase in
annual
depreciation from
year
3
to
year
4
(2
marks)
After
the
fourth
year,
the
trader
is
declared bankrupt,
and
the
machine
is
sold
for f2,500
to
raise money
to
pay
creditors.
(c)
Calculate the
loss
recorded
on
the sale
of
the
machine.
(3
marks)
The E2,500
received for
the
machine increases the amount
paid
to
unsecured
ereditors
from E0.30 in the
pound
to
f0.35
in the
pound.
(d)
Calculate the
total amount
owed
to unsecured
creditors.
(3
marks)
(Total
l5
marks)
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8/12/2019 Series 4 Examination 2010 - 3003 Thur 1811.pdf
7/7
QUESTION 8
(a)
Company
C sold
4,450
monitors in
year
2008
and
5,162
monitors
in
year
2009.
Calculate
the
quantity
relative
for
year
2009
with
2008 as
the
base
year.
(2
marks)
(b)
The
number
of monitors sold
by
Company
C
fell by
11Yo lrom
year
2007 to
year
2008.
(i)
Express
the
quantity
sold
in
2008
as
a
quantity
relative
based on
year
2007.
(2
marks)
(ii)
Calculate
the number
of
monitors
sold
in
2007.
l-
'
i.
*.'i
T,,:
6{i
(2
marks)
(c)
ln
year
2009
Company
C
cut
the
price
of
its
monitors
by
10%
of
the
year
2008
price.
Express
the
income
from
sales
of monitors in
2009
as
an index, based
on
the
income
from
sales
of monitors
in
year
2008
=
100.
(2
marks)
(d)
The
cost of
components
for the
monitors sold
by
Company
C
was
as
follows:
2008
E56
per
monitor
2009
E60
per
monitor
Calculate the
average cost
of
components
per
monitor sold
in the
period
2008
to
2009
inclusive.
(4
marks)
(Total
12
marks)