Project Analysis and Evaluation (ECO311)

DIPET 1 in Economics - ECNT

Semester: Resit

Level: 400

Year: 2014

Answers (200 )
T H E U N I V E R S I T Y O F B A M E N D A
HIGHER TECHNICAL TEACHER TRAINING COLLEGE (HTTTC)
ECONOMICS SERIES - LEVEL III 2013/2074 RESIT EXAMS
PROJECT ANALYSIS AND EVALUATIONEXAMINATION (2 HRS)
Note: Attempt all three questions. Show all calculations where necessary.
QUESTION I (20 marks)
Write TRUE for the right statement or FALSE for the wrong one for each of the
following statements below
i)
Project study is not an important aspect of the investment decision process.
ii)
The most important role of project evaluation is to reduce opportunity cost.
iii)
All capital costs are lump sums which are all not incurred at the beginning of a
project's life.
Iv) Project cycle is a conglomeration of the different activities at the different
stages of project analysis.
iv)
A reject at the Decision Phase means complete abandonment of the project idea.
v)
Some project cost and benefits cannot be quantified and should not be
completely ignored in evaluating projects. le
vi)
Project benefits are certain to occur if projects are properly evaluated.
vii)
All project costs increase with the scale of production.
viii)
The saying "a bird in hand is worth two in the bust" relates to the
uncertainty surrounding the present value of money.
ix)
The basic aim of discounting is to reduce the value of a future sum to its present
value.
QUESTION II (20 marks)
i) What is cost over-run? (one sentence)
ii) Outline three reasons for cost over-run (3 phrases)
iii) Give two reasons why we evaluate projects (2 sentences)
iv) What do you understand by compounding and discounting? (2 short sentences)
v) Distinguish between an annuity and perpetuity (one sentence)
QUESTION III (30 marks)
i) The discounted cash 'flow of a project shows - 25 million frs in year zero and + 15million frs in
year n.
Interpret the two figures in the question in two short phrases.
ii)
The Net Present Value (NPV) of a project is 61 Billion frs while the Present Value
(PV) of the project costs is 25 Billion frs. What is the PV Of the project benefits?
iii)
The government floats annual bonds of 125 Billion frs in order to raise capital for its
structural projects. If the interest rate is 16 percent
per
annum. How much capital can the
government raise?
iv) Peter intends to invest the sum of 6000 FF in a project that will yield 1500 FF each
year for 10 years. If the cost of capital is 20 percent, should Peter invest in this. project?
iv)
In how many years will the project in (iv) above recover its initial capital?
GOOD LUCK
Man Lep I Lep
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CONTEMPO RARY ECONOMIC ISSUES
ES3. H.T.T.T.C.
UNIVERSITY OF BAMENDA. DECEMBER 2014 EXAMS
INSTRUCTIONS: ANSWER BOTH QUESTIONS.2II
.
1. What is the ACP Group and what are the goals and objectives of the group? (C/A)
2. The Yaounde Agreements was the beginning of cooperation between the
developing world and
European Union. Discuss
Business Organization
Instructions: Attempt ALL Questions. You are reminded for clarity and orderly
presentation in your answers.
1 .
Define the term business association.
(b) Comment on the distinct characteristics of Business Association
2 .
A store wants to liquidate 200 of its shirts and 100 pairs of paint from last
season. They have decided to put two offers, A and B. Offer A is
_
a
package of one shirt and a pair of paints which will sell for 3000 FRS.
Offer B is a package of three shirts and a pair of paints, which will sell for
5000 FRS. The store does not want to sell less than 20 packages of Offer A
and less than 10 of Offer B. How many packages of each do they have to
sell to maximize the money generated from the promotion?
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UBa- HTTTC
First Semester Examination: 2013
Department of Economics: Level 3
Econometrics: Level 300
Time allowed: 2hrs
1.
a) Distinguish between a statistic and a paramete
r:
b) List and briefly explain any four properties of a good estimator. (4 mks)
2.
Consider the following sample information on the quantity demanded
of a commodity (Y), price of the commodity (X
1
) and income (X
2
) of
a consumer for a period of five months.
3.
Month
1 2 3 4 5
Demand (Y) 3 4 2 6 8
Price (X
1
) 2 4 5 6 7
Income (X
2
)
4 3 2 1 1
a) Write the.population stochastic and deterministic relation of the equation. (2mks)
b) Write the estimated equation and discuss the a priori signs of the estimators. (2 mks)
c) Write the normal equations for this two variate model. (2 mks)
d) Use the OLS method and matrix algebra to estimate the model ( 8 mks)
e) Determine the coefficient of determination and interpret your answer (2 mks)
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