Thursday, February 28, 2019

HBF 417/BAM 412-MANAGERIAL ECONOMICS 1-2ND TEST


LAGOS CITY POLYTECHNIC, IKEJA, LAGOS
SCHOOL OF MANAGEMENT AND BUSINESS STUDIES
HBF 417/BAM 412-MANAGERIAL ECONOMICS1 2ND TEST
TO WHOM: HND2 BA AND HND 1 AC    TIME: 45MINUTES

FULL NAME………………………………………………………………….
MATRIC NUMBER………………………………………………………….
MOBILE NUMBER………………………………DATE…………………..
DEPARTMENT……………………………………LEVEL…………..........
SECTION A
Sogbae Local Government has identified a vacant land besides its marriage registry building. The director of administration proposed that the land be used either for a cybercafé where the general public can browse, make phone calls, photocopy and carry out other computer services or for construction of an entertainment event-hall that can be rented out on commercial basis.
This idea was tabled at the council`s management meeting and unanimously accepted. However, the Finance and General Purposes Committee recommended five years for the project since the council secretariat building will be extended in future to accommodate more offices for the increased staff strength and this was approved.
The cost of building the cybercafé and the event-hall with necessary facilities and fittings as well as the expected cash inflows/profits as prepared by the director of administration are as follows:

Cybercafe
Event Hall

N`000
N`000
Initial Cash Outlay
225,000
300,000
Residual Value
20,000
20,000
Cash Inflows:
2013
2014
2015
2016
2017

90,000
105,000
120,000
135,000
150,000

150,000
150,000
30,000
30,000
30,000
As the consultant engaged by Sogbae Local Government, you are required to answer the underlisted questions.
1.  Determine the depreciation of  both projects.
    (a)  N41,000, 000 and N56,000,00  (b) N45,000 and 60,000   (c) N41,000 and N56,000
    (d) None of the above

2.  Calculate the Accounting Rate of Return for both projects.
    (a) 64.49% and 13.75%    (b) 2.45% and 1.22%  (c) 32.25% and 6.88%
    (d) 2.67% and 1.30%

3. What is the payback period of the two projects?
    (a) 2years 3months and 2years  (b) 2years and 2years 3months (c) 3years and 2years
    (d) None of the above

4.  Estimate the Accounting Profit of both projects.
    (a) N395,000,00 and N110,000,000    (b) N395,000 and N110,000 (c)  N355,000 and
      N70,000  (d) N355,000,000 and N70,000,000
5. As the consultant engaged by Sogbae Local Government, advise the Local Government on the more viable project using Pay Back Period and Accounting Rate of Returns.
(a) Event hall project is more viable based on payback period and Cybercafé project is more viable based on Accounting Rate of Return            (b) Cybercafé project is more viable based on payback period and Event hall project is more viable based on Accounting Rate of Return   (c) Both Event hall project and Cybercafé project are more viable based on Accounting Rate of Return     (d) Both Event hall project and Cybercafé project are more viable based on payback period  and Accounting Rate of Return.

SECTION B
6. A market economy is an economic system in which most of the means of ……………….. are owned and controlled by private individuals and in which the economic activities of the government are at minimum.

7. Imperfect market are usually classified into four, these are monopoly……………., ………………….,and monopsony.

8.  A firm in a perfect market is said to be at equilibrium in the short run where……………

9.  Managerial Economics uses……………..and……………………..to solve managerial problems.

10. Calculate the value of a firm when the profits and interest for its two years of operations are:
                                                Year1                                      Year 2
Profit                                       N300,000                                N450,000
Interest                                                10%                                         12%




Best of Luck!
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