QUESTION 1

XYZ Ltd. is a building construction company, intending to undertake a new project, required
£150,650 of initial investment. The cost of capital for this project is estimated at 14% per
annum.
A consultant of XYZ Ltd. has come up with the following cash flow projections:
Cash flows/Years 2021 2022 2023 2024 2025 2026
Cash inflows (£) 10,500 40,150 100,430 200,500 250,370 300,450
Cash outflows (£) 20,300 50,350 50,000 75,600 100,860 100,000

As the Finance Director of XYZ Ltd., you are required to:

a) Appraise the proposed project using the Net Present Value (NPV) technique.
b) Comment on the results.

QUESTION 2

The below table shows the rainfall data in mm (millimetre) over the period of 30 days.
32 71 47 42 32
48 48 38 64 85
43 66 51 82 37
86 81 32 68 74
55 61 64 57 77
72 72 48 68 53
a) Plot a histogram using above data.
b) Use the above information to compute:

i. The mean
ii. The median
iii. The mode
iv. The range

QUESTION 3
The table below shows the number of students who live in different cities.
City Number of Students

Central London 2560

Southall 5320
East Ham 5160
Watford 1380
Luton 1580
Cockfosters 2460

Use the above information to sketch:

a) A pie chart (showing calculations)
b) A column/bar chart
 Formula Sheet

1. The Mean of Ungrouped Data; The Mean of Grouped Data

∑𝑥 ∑𝑓𝑥
Mean; µ = Mean; µ =
𝑁 ∑𝑓

2. Standard Deviation of Ungrouped Data

∑(𝑥−µ)2
SD = √
𝑁

3. Standard Deviation of Grouped Data

∑𝑓(𝑥−µ)2
SD = √
∑𝑓

4. The Variance = the standard deviation squared i.e 𝑺𝑫𝟐

5. Internal Rate of Return

𝑁𝑃𝑉1
IRR = R1 + × (R2 – R1)
𝑁𝑃𝑉1−𝑁𝑃𝑉2

6. Base-Weighted Index or Laspeyres Price Index (LPI):

LPI =
P Q
n 0
 100
P Q
0 0

7. Current Weighted Index or Paasche Price Index (PPI)

PPI =
P Q
n n
 100
P Q
0 n

Where : P0 = Base year’s prices

Q0 = Base year’s quantities
Pn = Current year’s prices
Qn = Current year’s quantities

Page 2 of 4
DISCOUNT FACTORS
INTEREST RATE
1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 25% 30%
PERIOD
1 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.800 0.769
2 0.980 0.961 0.943 0.925 0.907 0.890 0.873 0.857 0.842 0.826 0.812 0.797 0.783 0.769 0.756 0.743 0.731 0.718 0.706 0.694 0.640 0.592
3 0.971 0.942 0.915 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0.675 0.658 0.641 0.624 0.609 0.593 0.579 0.512 0.455
4 0.961 0.924 0.888 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.613 0.592 0.572 0.552 0.534 0.516 0.499 0.482 0.410 0.350
5 0.951 0.906 0.863 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.593 0.567 0.543 0.519 0.497 0.476 0.456 0.437 0.419 0.402 0.328 0.269
6 0.942 0.888 0.837 0.790 0.746 0.705 0.666 0.630 0.596 0.564 0.535 0.507 0.480 0.456 0.432 0.410 0.390 0.370 0.352 0.335 0.262 0.207
7 0.933 0.871 0.813 0.760 0.711 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.425 0.400 0.376 0.354 0.333 0.314 0.296 0.279 0.210 0.159
8 0.923 0.853 0.789 0.731 0.677 0.627 0.582 0.540 0.502 0.467 0.434 0.404 0.376 0.351 0.327 0.305 0.285 0.266 0.249 0.233 0.168 0.123
9 0.914 0.837 0.766 0.703 0.645 0.592 0.544 0.500 0.460 0.424 0.391 0.361 0.333 0.308 0.284 0.263 0.243 0.225 0.209 0.194 0.134 0.094
10 0.905 0.820 0.744 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0.295 0.270 0.247 0.227 0.208 0.191 0.176 0.162 0.107 0.073
11 0.896 0.804 0.722 0.650 0.585 0.527 0.475 0.429 0.388 0.350 0.317 0.287 0.261 0.237 0.215 0.195 0.178 0.162 0.148 0.135 0.086 0.056
12 0.887 0.788 0.701 0.625 0.557 0.497 0.444 0.397 0.356 0.319 0.286 0.257 0.231 0.208 0.187 0.168 0.152 0.137 0.124 0.112 0.069 0.043
13 0.879 0.773 0.681 0.601 0.530 0.469 0.415 0.368 0.326 0.290 0.258 0.229 0.204 0.182 0.163 0.145 0.130 0.116 0.104 0.093 0.055 0.033
14 0.870 0.758 0.661 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.232 0.205 0.181 0.160 0.141 0.125 0.111 0.099 0.088 0.078 0.044 0.025
15 0.861 0.743 0.642 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.209 0.183 0.160 0.140 0.123 0.108 0.095 0.084 0.074 0.065 0.035 0.020
16 0.853 0.728 0.623 0.534 0.458 0.394 0.339 0.292 0.252 0.218 0.188 0.163 0.141 0.123 0.107 0.093 0.081 0.071 0.062 0.054 0.028 0.015
17 0.844 0.714 0.605 0.513 0.436 0.371 0.317 0.270 0.231 0.198 0.170 0.146 0.125 0.108 0.093 0.080 0.069 0.060 0.052 0.045 0.023 0.012
18 0.836 0.700 0.587 0.494 0.416 0.350 0.296 0.250 0.212 0.180 0.153 0.130 0.111 0.095 0.081 0.069 0.059 0.051 0.044 0.038 0.018 0.009
19 0.828 0.686 0.570 0.475 0.396 0.331 0.277 0.232 0.194 0.164 0.138 0.116 0.098 0.083 0.070 0.060 0.051 0.043 0.037 0.031 0.014 0.007
20 0.820 0.673 0.554 0.456 0.377 0.312 0.258 0.215 0.178 0.149 0.124 0.104 0.087 0.073 0.061 0.051 0.043 0.037 0.031 0.026 0.012 0.005
25 0.780 0.610 0.478 0.375 0.295 0.233 0.184 0.146 0.116 0.092 0.074 0.059 0.047 0.038 0.030 0.024 0.020 0.016 0.013 0.010 0.004 0.001
30 0.742 0.552 0.412 0.308 0.231 0.174 0.131 0.099 0.075 0.057 0.044 0.033 0.026 0.020 0.015 0.012 0.009 0.007 0.005 0.004 0.001 0.000
35 0.706 0.500 0.355 0.253 0.181 0.130 0.094 0.068 0.049 0.036 0.026 0.019 0.014 0.010 0.008 0.006 0.004 0.003 0.002 0.002 0.000 0.000
40 0.672 0.453 0.307 0.208 0.142 0.097 0.067 0.046 0.032 0.022 0.015 0.011 0.008 0.005 0.004 0.003 0.002 0.001 0.001 0.001 0.000 0.000
45 0.639 0.410 0.264 0.171 0.111 0.073 0.048 0.031 0.021 0.014 0.009 0.006 0.004 0.003 0.002 0.001 0.001 0.001 0.000 0.000 0.000 0.000
50 0.608 0.372 0.228 0.141 0.087 0.054 0.034 0.021 0.013 0.009 0.005 0.003 0.002 0.001 0.001 0.001 0.000 0.000 0.000 0.000 0.000 0.000
Page 2 of 4