ACCA FM — Financial Management Practice Exam 3

A global wildlife conservation NGO, 'FaunaProtect', is evaluating its financial management objectives. Unlike a commercial entity, FaunaProtect does not aim to maximize shareholder wealth.

Which of the following best describes the primary financial management objective for FaunaProtect?

A national government has recently implemented an expansionary monetary policy to stimulate the economy. 'SunWind Energy', a renewable energy firm, is assessing the macroeconomic impact on its operations.

Which TWO of the following are likely consequences of this expansionary monetary policy for SunWind Energy?

'CloudSync', a rapidly growing SaaS (Software as a Service) startup, is experiencing cash flow difficulties due to late-paying enterprise clients. The finance director is considering either factoring or invoice discounting.

Which of the following statements correctly distinguishes factoring from invoice discounting?

'AgriGrow', an organic fertilizer producer, uses 10,000 tonnes of raw compost annually. The cost of placing an order is $50. The holding cost per tonne per year is $4.

Calculate the Economic Order Quantity (EOQ) for the raw compost.

(Enter your answer as a whole number without any units or commas)

'SteelForge Inc' is deciding between two heavy forging machines. Machine A has a life of 3 years and a Net Present Value (NPV) of costs of $120,000. Machine B has a life of 5 years and an NPV of costs of $180,000. The company's cost of capital is 10%.

The 3-year annuity factor at 10% is 2.487. The 5-year annuity factor at 10% is 3.791.

Based on the Equivalent Annual Cost (EAC), which machine should be chosen and why?