The management of J Co have heard about the concept of the time value of money.-新东方在线职业题库

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The management of J Co have heard about the concept of the time value of money.

Required:

(i) Complete the gaps in the following statement: The time value of money means that $1 now is worth (GAP 1) than $1 in the future. The reasons for this are risk, (Gap 2) and potential for earning a return e.g. interest.

(ii) Using a discount rate of 8%, and assuming that the cash flows arise at the end of a year, calculate the discounted payback period.

考点：Chapter15Budgeting

(i) Gap 1 more

Gap 2 inflation

(ii) Year Cash flow x DF Cumulative cashflow

0 -18,750 -18,750

1 5,000 x 0.926 = 4,630 -14,120

2 5,000 x 0.857 = 4,285 -9,835

3 5,000 x 0.794 = 3,970 -5,865

4 5,000 x 0.735 = 3,675 -2,190

5 5,000 x 0.681 = 3,405 +1,215

As the cash flows arise at the end of the year payback will be 5 years Alternative working

The project will payback when $18,750 = $5,000 x AF @ 8%

AF(1-n)=3.75

The annuity factor for 4 years is 3.312, and 5 years is 3.993. Therefore the payback must occur at 5 years as the cash flows arise at the end of the year.

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材料全屏

60

【单项选择题】

What was the adverse material price variance?

A

$1,000

B

$3,500

C

$7,500

D

$11,000

What was the favourable material usage variance?

A

$2,500

B

$4,000

C

$7,500

D

$10,000

材料全屏

62

【单项选择题】

What was the total direct materials variance?

A

Nil

B

$10,000 Adverse

C

$10,000 Favourable

D

$11,000 Adverse

What was the total direct labour variance?

A

$6,000 Favourable

B

$20,000 Adverse

C

$22,000 Favourable

D

Nil

What was the total direct variable overheads variance?

A

Nil

B

$12,000 Favourable

C

$12,000 Adverse

D

$11,000 Adverse

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