Business

1. 1.

   Explain why contribution per unit is not the same as profit per unit when a firm has fixed costs.

   [2 marks] · no calculator
2. 2.

   Fictional case: price is 30, variable cost 18 per unit and fixed costs 24000. Calculate break-even output and the margin of safety at sales of 2600 units.

   [3 marks]
3. 3.

   Fictional case: an investment costs 50000 now and returns net cash of 18000, 20000 and 16000 at the end of years 1, 2 and 3. Assuming uniform receipts within year 3 for payback, calculate payback and NPV using supplied discount factors 0.91, 0.83 and 0.75.

   [4 marks]
4. 4.

   Fictional case: launch A yields 80000 with probability 0.6 and loses 20000 with probability 0.4; its separate launch cost is 10000. Launch B gives 30000 for certain before a separate 5000 cost. Calculate net expected values and explain one limitation of choosing the higher value.

   [4 marks]
5. 5.

   Fictional case: a firm must choose a quick-payback machine with high maintenance or a slower-payback efficient machine with a higher forecast NPV. Evaluate using payback alone.

   [4 marks] · no calculator
6. 6.

   Fictional case: an exporter's proposed expansion has positive NPV using one demand forecast and one exchange rate. Evaluate approving it without sensitivity analysis.

   [4 marks] · no calculator

Original, unofficial practice questions from SubjectScout — not official past-paper questions.