NATIONAL OPEN UNIVERSITY OF NIGERIA

UNIVERSITY VILLAGE, PLOT 91, CASDASTRAL ZONE, NNAMDI AZIKIWE EXPRESS WAY, JABI, ABUJA.
FACULTY OF MANAGEMENT SCIENCES
JULY 2018 EXAMINATION

COURSE CODE: BFN728                                                                           CREDIT UNITS: 2

COURSE TITLE: Quantitative Techniques for Financial Decisions

TIME ALLOWED: 2 Hrs

INSTRUCTIONS:   1. Attempt question number one (1) and any other (2) questions.

                                   2. Question number 1 carries 30 marks, while the other two (2)                                                      questions carry 20 marks each.

1a. XYZ Company produces product A for which cost (including labour and material) is N6/unit. Fixed cost is N80,000. Each unit is sold for N10. Determine the number of units which must be sold for the company to earn a profit of N60,000.                                                       (15Marks)

b. Discuss the following sampling techniques;                                                         

i. Simple random sampling technique

ii. Stratified random sampling technique

iii. Systematic sampling technique

iv. Cluster sampling technique

v. Multistage Sampling technique                                                                              (15Marks)

2a. Solve for X and Y in the system of equations: 

3X - 4Y = 13                           (1)

3Y + 2X = 3                            (2)                                                                               (15Marks)

b. Briefly discuss the two advantages of samples over total enumeration.               (5 Marks)

3. Suppose a factory manager is setting up a production schedule for two models, A and B, of a new product. Model A requires 4 units of labour input and 9 units of capital input. Model B requires 5 units of labour input and 14 units of capital input. The total available labour input for the production of the product is 335 man-hours per day, and that of capital is 850 units per day. How many of each model should the manager plan to make each day so that all the available labour hours and capital inputs are used.                                                                     (20Marks)

4a. Discuss six (6) methods of data collection as itemized below.                          

i. Experimental method

ii. Direct observation

iii. Personal interview

iv. Telephone survey

v. Registration

vi. Questionnaire                                                                                              (12Marks)

b. What do you understand by Net Present Value (NPV) and Internal Rate of Return (IRR)? How are they used?                                                                                                                (8Marks)

5. The followings are two capital projects involving the purchase, use and final disposal of two machines, machine A and machine B:

Machine Type Initial Cost                                          Net Cash flows

                                                                        YR1                 YR2                 YR3                 YR4

Machine A                  50,000                         25,000             24,500             17,000             14,000

Machine B                  45,000                         12,500             15,500             21,000             38,000

You are required to choose between projects A and B using NPV appraisal techniques at a cost of capital of 22% and 28%.                                                                                           (20Marks)