- Question 2 Which Of The Following Statements Concerning Financial Management Are Correct 1 It Is Concerned With Inves 1 (40.06 KiB) Viewed 50 times
- Question 2 Which Of The Following Statements Concerning Financial Management Are Correct 1 It Is Concerned With Inves 2 (122.08 KiB) Viewed 50 times
Question 2 Which of the following statements concerning financial management are correct? (1) It is concerned with investment decisions, financing decisions and dividend decisions (2) It is concerned with financial planning and financial control (3) It considers the management of risk A. 1 and 2 only B. 1 and 3 only C. 2 and 3 only D. 1, 2 and 3
Question 3 PFM Plc is considering the purchase of a new machine. It has identified two possible machines with initial costs and expected cash savings per year as follows: Co £ C1 £ C2 £ C3 £ C4 £ C5 £ Machine A -20,000 3,000 5,500 6,000 7,200 4,000 Machine B -20,000 5,000 6,500 7,300 5,000 Machine A has a useful life of 5 years while machine B has a useful life of 4 years. Neither of these machines has any residual value at the end of their lives. The two machines are mutually exclusive. The opportunity cost of capital for PFM Plc is 5% per year. If PFM Plc is going to replace the chosen machine each time when it reaches the end of its useful life, which machine would you recommend the management to invest? A. The equivalent annual values of machine A, B are £482.7 and £304, respectively. A should be bought. B. The equivalent annual values of machine A, B are £500 and £677, respectively. B should be bought. C. The equivalent annual costs of machine A, B are £482.7 and £304, respectively. B should be bought. D. The equivalent annual costs of machine A, B are £468.5 and £455, respectively. B should be bought.