A company is considering four mutually exclusive projects. There are three possible future demand conditions but the company has no idea of the probability of each of these demand conditions occurring. The forecast net present values (NPVs) of each of the four projects, under each of the three possible future demand conditions, are as follows.

Which investment would be selected using the maximin criterion?

• A.Investment D
• B.Investment B
• C.Investment A
• D.Investment C

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Which of the following statements is correct?

• A.Uncertainty can be quantified and probabilities can be assigned reliably to the possible outcomes.
• B.Risk can be quantified and probabilities can be assigned reliably to the possible outcomes.
• C.Risk cannot be quantified and probabilities cannot be assigned reliably to the possible outcomes.
• D.Uncertainty cannot be quantified and probabilities can be assigned reliably to the possible outcomes.

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A not-for-profit organization measures performance using the three Es.
If the organization has been acquiring the resources it needs as cheaply as possible it should be described as having been:

• A.Enterprising
• B.Effective
• C.Economic
• D.Efficient

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The following forecast data relate to the first three years of a five year project.
The project will require an initial investment of $30,000 in non-current assets.
All revenue will be received in the year it is earned and all operating costs will be paid in the year they are incurred. Tax will be paid in the following year.
Tax depreciation will be 25% per annum of the reducing balance.
The taxation rate will be 30% of taxable profits.

What is the forecast after tax cash flow for year 3 (to the nearest $10)?

• A.$46,000
• B.$39,750
• C.$45,890
• D.$38,500

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A manufacturing company has just developed a new product and must now determine the most appropriate pricing strategy for its initial launch.
The product will initially be unique because it will include highly desirable features that no competitive product offers. Its development has involved substantial expenditure and the company wishes to recover this as soon as possible.
The product's uniqueness is expected to last for only six months before a competitor launches a similar product. It is expected that the competitor will avoid any significant development costs by reverse engineering the company's own product.
At that point, to remain competitive, the company must ensure that its selling price matches that of the competitor.
Which of the following pricing strategies would be most suitable for the initial launch of the company's product?

• A.Penetration pricing
• B.Own label pricing
• C.Market skimming
• D.Dual pricing

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