Sqm (Statistic Essay

940 Words4 Pages
Question 1 : a. Discuss the following investment appraisal technique methods and state which is the best to use when appraising investments. i. Payback Period i. Net Present Value ii. Internal Rate of Return b. The table below shows the net cash flow for a real estate project. This project requires an initial investment of £15,400. The cost of borrowing is also 10%. Period (years) | Net Cashflows (£) | 1 | 2500 | 2 | 3200 | 3 | 4000 | 4 | 5000 | 5 | 5125 | 5 | 7,000 | Calculate : i. The payback period ; ii. The net present value (NPV); iii. The internal rate of return (IRR); iv. The Net Terminal Value. Comment on whether the project is viable or not. Give reasons for your answer. Question 2 The data below represents the total advertising and sales of a pharmaceutical company from the year 2000 to 2007: Year | Advertising (‘000) | Sales (‘000) | 2000 | 12.7 | 21.9 | 2001 | 12.1 | 22.8 | 2002 | 14.0 | 21.1 | 2003 | 15.6 | 21.7 | 2004 | 16.3 | 21.0 | 2005 | 17.5 | 22.1 | 2006 | 16.7 | 20.9 | 2007 | 16.6 | 18.7 | i. Calculate the product moment coefficient of correlation; ii. Calculate Spearman Rank Coefficient of correlation. iii. From your result; interpret the strength relationship that exists between advertising and sales and state how important is this finding to a business manager. Question 3 : Use Excel to solve this question. The table below shows the Sales and Profit of a firm from 1985 to 1994. Year | Sales (£‘000) | Profit (£’000) | 1985 | 106 | 10 | 1986 | 125 | 12 | 1987 | 147 | 16 | 1988 | 167 | 17 | 1989 | 187 | 18 | 1990 | 220 | 22 | 1991 | 229 | 29 | 1992 | 250 | 50 | 1993 | 300 | 80 | 1994 | 328 | 108 | i. Using MS Excel, do a regression analysis for the above data. Use Profit as the dependant variable and sales as the
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