Page 278 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

Appendix 2

Select the best investment appraisal technique for each of the
opportunities given:

Investment opportunity Appraisal technique

Develop a more environmentally
friendly washing machine/tumble drier.
Financed by cutting the forthcoming Adjusted present value
dividend

Open a chain of retail outlets to sell
their current products in. Financed via NPV using risk adjusted WACC
a rights issue.

Develop a range of fashion
accessories, financed by a subsidised NPV using existing company WACC
loan.

Develop a new combi fridge/washing
machine, financed partly by a rights
issue and partly by a bank loan.

50 The Royal National Lifeboat Association (RNLI) is a charity whose aim is to
save lives at sea. They do this through a variety of methods such as lifeguards
at popular beach resorts, lifeboats situated around the coast, and education and
safety advice.

The RNLI is predominantly funded by different types of donations, regular
donors who contribute a small amount by direct debit each month, one off
donations and funds generated through fund raising initiatives

Which of the following would be appropriate performance indicators to
apply to the RNLI? Select all that apply

A Percentage of successful rescues

B Increase in donations per year

C Gross profit margin

D Number of new regular donors per month

E Number of school visits per year

F Return on capital employed

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