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IB BM UNIT 3 FINANCE (SL) QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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IB BM UNIT 3 FINANCE (SL) QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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IB BM UNIT 3 FINANCE (SL) QUESTIONSAND ANSWERS WITH SOLUTIONS 2024
AverageArateAofAreturnA(ARR)A-
AANSWERACalculatesAtheAaverageAannualAprofitAofAanAinvestmentAproject,AexpressedAasAaApercentageAofAt
heAinitialAsumAofAmoneyAinvested
DiscountedAcashAflowA-
AANSWERAAAdiscountAfactorA(theAinverseAofAcompoundAinterest)AtoAreduceAtheAvalueAofAmoneyAreceivedAi
nAfutureAyearsAbecauseAmoneyAlosesAitsAvalueAoverAtime
InvestmentsA-
AANSWERATheApurchaseAofAassetsAwithApotentialAtoAyieldAfutureAfinancialAbenefits,Ae.g.AupgradingAcomput
erAsystemsAorAtheApurchaseAofApropertyA(suchAasAlandAandAbuildings)
InvestmentAappraisalA-AANSWERAAAfinancialAdecision-
makingAtoolAthatAhelpsAmanagersAtoAcalculateAwhetherAcertainAinvestmentAprojectsAshouldAbeAundertake
nAbasedAmainlyAonAquantitativeAtechniques
NetApresentAvalueA(NPV)A-
AANSWERACalculatesAtheAtotalAdiscountedAnetAcashAflowsAminusAtheAinitialAcostAofAanAinvestmentAproject.A
IfAtheANPVAisApositive,AthenAtheAprojectAisAviableAonAfinancialAgrounds
PaybackAperiodA-
AANSWERAAnAinvestmentAappraisalAtechniqueAthatAcalculatesAtheAlengthAofAtimeAneededAtoArecoupA(earnA
back)AtheAinitialAexpenditureAonAanAinvestmentAproject
QualitativeAinvestmentAappraisalA-
AANSWERAJudgingAwhetherAanAinvestmentAprojectAisAworthwhileAthroughAnon-
numericalAmeans,Ae.g.AisAtheAinvestmentAconsistentAwithAtheAcorporateAculture?
QuantitativeAinvestmentAappraisalA-
AANSWERAJudgingAwhetherAanAinvestmentAprojectAisAworthwhileAbasedAonAnumericalA(financial)Ainterpret
ations,Ai.e.ApaybackAperiod,AARRAandANPV
, AssetsA-
AANSWERAItemsAwithAaAmonetaryAvalueAthatAbelongAtoAaAbusiness.ATheyAcanAeitherAbeAfixedAassetsA(e.g.A
machinery,AtoolsAandAbuildings)AorAcurrentAassetsA(e.g.Acash,AstockAandAdebtors)
CashA-
AANSWERAAAcurrentAassetAthatArepresentsAtheAactualAmoneyAaAbusinessAhas.AItAcanAexistAinAtheAformAofAca
shAinAhandA(cashAheldAinAtheAbusiness)AorAcashAatAbankA(cashAheldAinAaAbankAaccount)
CashAflowA-
AANSWERATheAtransferAorAmovementAofAmoneyAintoAandAoutAofAaAfirm.ACashAinflowsAmainlyAcomeAfromAs
alesArevenueAwhereasAcashAoutflowsAareAforAitemsAofAexpenditure
CashAflowAforecastA-
AANSWERAAAfinancialAdocumentAthatAshowsAtheApredictedAfutureAcashAinflowsAandAcashAoutflowsAforAaAbu
sinessAduringAaAtradingAperiod
CashAflowAstatementA-
AANSWERATheAfinancialAdocumentAthatArecordsAtheAactualAcashAinflowsAandAcashAoutflowsAofAaAbusinessAd
uringAaAspecifiedAtradingAperiod,AusuallyA12Amonths
ClosingAbalanceA-
AANSWERATheAvalueAofAcashAleftAinAaAbusinessAatAtheAendAofAeachAmonth,AasAshownAinAitsAcashAflowAforec
astAorAstatement
CurrentAassetsA-AANSWERALiquidAresourcesAownedAbyAaAbusiness,Ai.e.Acash,AdebtorsAandAstocks
CurrentAliabilitiesA-
AANSWERATheAmoneyAthatAaAbusinessAowesAthatAneedsAtoAbeArepaidAwithinAtheAnextAtwelveAmonths,Ae.g.A
overdraftAandAcreditors
CreditorsA-
AANSWERABusinessesAthatAhaveAsoldAgoodsAorAservicesAonAtradeAcredit,AsoAwillAcollectAthisAmoneyAfromAits
AdebtorsAatAaAfutureAdate
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