Investment appraisal: past paper questions
Real questions on investment appraisal
The newest 20 of 98 written questions. Open one to see it on the real paper.
- 9706/23 · October/November 2025 · Q3a[2]
Calculate the number of issued ordinary shares at 1 April 2024.
See it on the paper → - 9706/31 · October/November 2025 · Q3d[2]
Suggest two methods of funding which would not be included in the cash flow from financing activities.
See it on the paper → - 9706/41 · October/November 2025 · Q1a(i)[3]
the new machine
See it on the paper → - 9706/41 · October/November 2025 · Q1a(ii)[3]
the upgraded machine.
See it on the paper → - 9706/41 · October/November 2025 · Q1b(i)[3]
the new machine
See it on the paper → - 9706/41 · October/November 2025 · Q1b(ii)[3]
the upgraded machine.
See it on the paper → - 9706/41 · October/November 2025 · Q1c[7]
Advise the directors which machine they should adopt if Product P were to be made. Justify your answer. Additional information 1 In his opinion, the accounting rate of return (ARR) should be the only criterion for making the investment decision. 2 X Limited is currently making Product C which consistently generates an...
See it on the paper → - 9706/41 · October/November 2025 · Q1d[6]
Assess the impact on the directors’ decision to make Product P if these two issues are addressed. Support your answer with calculations.
See it on the paper → - 9706/32 · May/June 2025 · Q1d[5]
Advise Nadim whether or not he should incorporate his business in view of his only concern. Justify your answer.
See it on the paper → - 9706/32 · May/June 2025 · Q2a[3]
State the conditions of recognising a provision in the financial statements in accordance with IAS 37.
See it on the paper → - 9706/41 · May/June 2025 · Q1b[4]
Calculate the net present value (NPV) of the project, assuming that day tickets are sold. Waheed was also considering selling annual tickets instead of day tickets. His best estimate of the sales of annual tickets was as follows: Year Number of annual tickets sold Total revenue $ 1 100 20 000 2 120 30 000 3 160 40 000...
See it on the paper → - 9706/41 · May/June 2025 · Q1c[7]
Advise Waheed whether he should sell day tickets or annual tickets if he goes ahead with the project. Justify your answer. A recalculation of the NPV with annual tickets is not required. Additional information Waheed’s brother uses the accounting rate of return (ARR) when considering his projects.
See it on the paper → - 9706/42 · May/June 2025 · Q1a[4]
Calculate the net cash flow for each year 1 to 4 for Option 1. Babar has a cost of capital of 10%. The discount factors for this are: Year 1 2 3 4 Discount factor 0.909 0.826 0.751 0.683 Additional information
See it on the paper → - 9706/42 · May/June 2025 · Q1b(i)[4]
Option 1
See it on the paper → - 9706/42 · May/June 2025 · Q1b(ii)[4]
Option 2. Additional information Babar’s brother has told him that it is important to choose the option which has the shorter payback period.
See it on the paper → - 9706/42 · May/June 2025 · Q1c[1]
State what is meant by the payback period.
See it on the paper → - 9706/42 · May/June 2025 · Q1d[4]
Discuss whether Babar should take the payback period of the options into account when making a decision. Calculations are not required.
See it on the paper → - 9706/42 · May/June 2025 · Q1e[7]
Advise Babar which option he should implement. Justify your answer.
See it on the paper → - 9706/42 · May/June 2025 · Q1f[1]
Name one other method of investment appraisal which Babar could use.
See it on the paper → - 9706/33 · October/November 2024 · Q1f[5]
Advise Betty whether she should keep her shares in AD plc or sell them. Justify your answer.
See it on the paper →
What examiners said
The statements showing the net cash flows for both models were well prepared with a high number of fully correct statements. Errors included the failure to account for the improvement cost for IM3 when accounting for depreciation and not applying the maximum production capacity when calculating sales for year two.
— Examiner report, October/November 2023, 9706/43 Q2(a) (Cambridge)
The statements showing the net cash flows for both models were well prepared with a high number of fully correct statements. Errors included the failure to account for the improvement cost for IM3 when accounting for depreciation and not applying the maximum production capacity when calculating sales for year two.
— Examiner report, October/November 2023, 9706/43 Q2(a) (Cambridge)
A high number of candidates stated one advantage with a few being able to state two appropriate advantages.
— Examiner report, October/November 2023, 9706/43 Q2(b) (Cambridge)
Past papers, syllabus and examiner reports © UCLES (Cambridge University Press & Assessment). Questions are matched to topics from the official syllabus. AssessPro is independent and not endorsed by Cambridge.