SERIES 2 EXAMINATION 2006

ADVANCED BUSINESS CALCULATIONS

LEVEL 3
(Code No: 3603/M)
SATURDAY 27 MAY
_________
Instructions to Candidates
(a) The time allowed for this examination is 3 hours.
(b) Answer all questions.
(c) Your answers should be written in blue or black ink/ballpoint. Pencil may be used only for graphs,
charts, diagrams, etc.
(d) All answers must be clearly and correctly numbered but need not be in numerical order. If no
working is shown, a correct answer may receive full marks but an incorrect answer will receive no
marks. Candidates are therefore advised to indicate how they arrive at their answers.
(e) All calculations, where applicable, must be shown on the answer paper provided.
(f)

The use of statistical tables is allowed.

(g) Candidates must pay due regard to good figures, accuracy and neatness in their work.
(h) Candidates may use calculators provided the calculators give no printout, have no word display
facilities, are silent and cordless. The provision of batteries and responsibility for their condition
must rest with the candidate.
_________

1
3603/2/06

ASE 3003 2 06 3
>f0t@W9W2`?[4iBk0j5^#

QUESTION 1
A bank successfully tenders RM389,000 for a Treasury bill that runs for 6 months and is to be
redeemed at par. They calculate that their investment will give a return corresponding to an annual
rate of simple interest of 5.7%.
(a) Calculate the value of the Treasury bill at redemption, giving your answer to the nearest
RM1,000.
(4 marks)

Jack deposits a sum of money for four years at a fixed rate of compound interest. After three years
the amount in the account is RM92,610, and after four years the amount in the account is
RM97240.50.
(b) Calculate:
(i)

The annual percentage rate of compound interest.

(3 marks)

(ii)

The original sum deposited.

(2 marks)

(iii)

The interest on the account after the first year.

(2 marks)
(Total 11 marks)

QUESTION 2
RM100 nominal value of 3% Government Stock can be bought for RM91. Interest is paid half
yearly. A bank invested RM432,250 in the stock.
(a) Calculate the nominal value of the stock bought by the bank.

(2 marks)

The bank held the stock for 4 years.

(b) Calculate the total interest received over this period.

(2 marks)

The bank purchased 200,000 6% Preference Shares (nominal value RM5per share) at RM5.87 per
share.
(c) Calculate the total cost of the shares.
(d) Calculate the dividend received each year.

(2 marks)
(2 marks)

The bank also purchased units in a unit trust with an offer price of RM200 per unit, and sold the units
after 2 years at RM230 per unit.
(e) Calculate the average percentage increase per annum in the price of the units. You should base
your calculation on simple interest.
(3 marks)
(Total 11 marks)

3603/2/06

OVER

QUESTION 3
An industrial product can be manufactured by two different methods of production. Using Method X,
fixed costs are RM9,000,000 per period and variable costs are RM43 per unit of product. Using
Method Y, fixed costs are RM7,600,000 per period.
At an output of 350,000 units per period, the total costs for Method Y are the same as for Method X.
(a) Calculate the variable costs per unit of product for Method Y.
(5 marks)

The manufacturer chooses Method X and sets a selling price so that it will break even on production
and sales of 750,000 units per period.
(b) Calculate the selling price and the contribution per unit of product.
(4 marks)

Total production and sales of the product are 1,200,000 units in a period.
(c) Calculate the profit made in the period.
(2 marks)
(Total 11 marks)

QUESTION 4
The following information relates to a retailers business for a trading year.
RM
556,000
355,000
16,000
21,000
39,550
41,450
189,000

Sales
Purchases
Sales returns
Purchases returns
Opening stock value
Closing stock value
Overhead expenses
(a) Calculate:
(i)

The cost of goods sold

(ii)

The net profit

(iii)

The overhead expenses as a percentage of the net sales

(3 marks)
(4 marks)
(2 marks)

(b) Give a brief explanation of the difference between gross profit and net profit
(2 marks)

(c) Calculate the rate of stockturn.

(3 marks)
(Total 14 marks)

3603/2/06

OVER

QUESTION 5
The estimated cost and returns for investment project A are as follows:

Initial investment cost

RM
4,750,000

Year 1 net cash inflow

Year 2 net cash inflow
Year 3 net cash inflow
Year 4 net cash inflow

1,500,000
1,500,000
1,500,000
1,500,000

(a) Calculate the payback period of project A in years and months.

(4 marks)
(b) Calculate the net present value of the project A at a discounting rate of 10%, using the following
table of discounting factors.
Year
Year 1
Year 2
Year 3
Year 4

Discounting factor at rate of 10%

0.909
0.826
0.751
0.683
(5 marks)

(c) Advise the potential investor for project A.

(3 marks)
The investor estimates the following figures for investment project B:
Initial cost of project
Expected life of project
Total return before allowing for repairs and maintenance
Average cost per annum of repairs and maintenance

RM3,500,000
5 years
RM8,000,000
RM200,000

(d) Estimate the average rate of return of project B.

(4 marks)
(Total 16 marks)

3603/2/06

OVER

QUESTION 6
In the bankruptcy of company A, 56.5 sen in the RM was paid to unsecured creditors.
(a)

Calculate the amount owed to an unsecured creditor who was paid RM10,452.50.
(2 marks)

The following figures apply to the bankruptcy of company B.

RM
85,000

Total assets
Total liabilities
Owed to secured creditors
(b)

129,000
74,000

Calculate the amount paid to an unsecured creditor who was owed RM1,250.
(4 marks)

In the bankruptcy of company C, an unsecured creditor who was owed RM75,000 was paid
RM48,000.
(c)

Calculate:
(i)

the rate in the RM paid to unsecured creditors.

(2 marks)

(ii)

how much was owed to an unsecured creditor who was paid RM35,200.
(2 marks)

(iii)

how much was paid to an unsecured creditor who was owed RM18,950.
(2 marks)
(Total 12 marks)

3603/2/06

OVER

QUESTION 7
The following is an extract from a depreciation table based on the equal instalment method of
depreciation.
Year

Annual Depreciation
(RM)

Cumulative
Depreciation (RM)

?
?
?
?
?

?
80,000
120,000
?
?

Initial Cost
Year 1
Year 2
Year 3
Year 4
Year 5

Book Value at End

of Year (RM)
?
?
?
?
90,000
?

(a) Copy and complete the table.

(6 marks)
The following is an extract from a depreciation table based on the diminishing balance method of
depreciation.
Year

Annual Depreciation
(RM)

Cumulative
Depreciation (RM)

?
52,500
36,750
?

?
?
?
?

Initial Value
Year 1
Year 2
Year 3
Year 4

Book Value at End

of Year (RM)
?
175,000
?
85,750
60,025

(b) Copy and complete the table.

(6 marks)
(Total 12 marks)

3603/2/06

OVER

QUESTION 8
An index of retail sales at January 2006 is shown below:
Group
Item X
Item Y
Item Z

Weight
570
295
135

Index (Jan 2000 = 100)

124.6
113.0
134.2

(a) Calculate the overall weighted index of retail sales, at January 2006 with January 2000 = 100, for
all items together.
(5 marks)

A section of an index of sales of computer games is shown. All of the figures are based on the same
base year, which is not shown.
Year
Index

2002
256

2003
320

2004
480

2005
432

(b) Calculate the indices for years 2003, 2004 and 2005 as a chain base index.
(4 marks)

The price of a particular item in February 2005 was RM54.75 and the price of the same item in
February 2006 was RM43.80.
(c) Calculate the price index and price relative for the item for February 2006 with February 2005 as
the base period. State clearly which of your answers is which.
(4 marks)
(Total 13 marks)

3603/2/06

Education Development International plc 2005