ACCA FM — Financial Management Practice Exam 2

Section A

GlobalHealth is a non-governmental organization (NGO) providing medical supplies to remote regions. Unlike commercial entities, GlobalHealth does not aim to maximize shareholder wealth.

Which of the following frameworks is most appropriate for assessing the financial management performance of GlobalHealth?

Section A

Quantum AI is a highly geared technology startup. The central bank of the country where Quantum AI operates has recently announced a policy of quantitative tightening and significant increases in the base interest rate to combat inflation.

What is the most likely immediate impact of this macroeconomic policy on Quantum AI?

Section A

AgriGrow Co is an agricultural supplier facing seasonal cash flow shortages. The finance director is considering using either invoice discounting or factoring to improve liquidity.

Which of the following statements correctly distinguishes between factoring and invoice discounting?

Section A

TerraFirma Mining needs to replace its heavy excavation machinery. The machinery can be replaced every 2 years or every 3 years. The cost of capital is 10%.

2-year cycle: PV of costs = $145,000
3-year cycle: PV of costs = $205,000

Annuity factors at 10%: 2 years = 1.736, 3 years = 2.487

Based on the Equivalent Annual Cost (EAC), which replacement cycle should be chosen and what is its EAC?

Section A

Crescent Holdings is looking to raise funds in compliance with Islamic finance principles. They are considering issuing Sukuk.

Which of the following statements regarding Sukuk are correct? (Select ALL that apply)