# ans

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```					BA&SC Exam January 2005

2.   (a)   (i)     Because NPV at discount rate of 17% = -£25000
- ie it is “nearly zero” in this context of millions -
Therefore IRR is nearly 17% (just a bit less)

(ii)    In fact IRR = 16.82% = 16.8% to one dp
(iii)   The choice is 5% of 10.5million
OR £1.5million discounted to year 5
( we assume at 17%)?
That is:£525000 or £684000 – choose the second unless
you don’t trust the project – in which case don’t do the
project.

(b)   Monthly at 11.4% has          APR = 12.01%
Daily at 11.3% has            APR = 11.96%
The contractor’s bank is slightly more economical

3    (a)   (i)     Linear graph with slight positive correlation
(ii)    r = 0.905 r2 = 82%
82% of the variation in costs is explained by the variation in
production – a good model
(iii)   15.6 means fixed costs of £15600
2.3 means each 1000 bottles cost an additional
2.3 hundred pounds - £0.23 extra per bottle

(b)   b = 2.1897            a = 55.565
Y = 55.565 + 2.1897 X
Fixed costs of improved model are much higher
Marginal costs are slightly less

4    (a)   (i)     Systematic sampling – say 10 jars a day?
(ii)    Not given.
(iii)   Median = 0.416 approx
(iv)    LQ = 0.4 and UQ = 0.427,
Lower bar at 0.38 and Upper bar at 0.43 approx
(v)     Confidence interval is 0.414 up to 0.424

(b)   (i)     3.36%
(ii)    0.414 litres.

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