s
Brighton Business School
Undergraduate Programmes
BSc (Hons) Accounting and Finance
Level Four Examination
FN142: Financial Skills
______________________
Instructions to candidates:
Time allowed: 2 Hours
Rubric:

There are eight questions on this paper. You are required to answer any FIVE of these
questions

Each question is worth twenty (20) marks

ALL Answers must be written in the answer booklet (or graph paper where applicable)
not on this question paper

Marks will be awarded for workings. PLEASE show ALL your workings

Candidates are advised to allow ten (10) minutes to read these instructions and the
question paper carefully, before attempting to answer any questions.

You will also be given a formula booklet with statistical tables and graph paper with
this question paper. Please ensure that any sheets of graph paper that you use are
attached to your answer booklet.
Supplied:
Formula Book
4 Sheets of Graph Paper
Allowable Material:
Candidates may use a calculator but it must not be programmable or wireless enabled.
Page 1 of 9
FN142: Financial Skills
(May/June 2018)
You are required to answer any FIVE of the following questions
Question 1
In a factory, three machines, X, Y and Z, are used to manufacture portable speakers.
Machine X makes 25% of the speakers
Machine Y makes 45% of the speakers
The rest of the speakers are made by machine Z.
It is known that 2% of the speakers made by machine X are faulty, 3% of the speakers made by
machine Y are faulty and 5% of the speakers made by machine Z are faulty.
(a)
Draw a tree diagram to illustrate all the possible outcomes and their associated probabilities
when a single speaker is chosen at random.
[6 marks]
For parts (b), (c) and (d), assume a single speaker is chosen from all the speakers produced
on a given day.
(b)
Calculate the probability that the speaker is made by machine X and is not faulty.
[2 marks]
(c)
Calculate the probability the speaker is faulty.
[3 marks]
(d)
Given that the speaker is faulty, find the probability that it was not made by machine Y.
[3 marks]
(e)
A speaker is chosen at random for examination and then replaced, followed by another
speaker chosen at random. What is the probability that one of the two speakers was faulty?
[6 marks]
(Total: 20 marks)
Page 2 of 9
FN142: Financial Skills
(May/June 2018)
Question 2
The table below is an extract from the records of a sports manufacturer specialising in badminton
racquets. Four different types of racquets were produced during the periods shown in the table –
the prices of each type of racquet and production volumes are given.
Prices (£)
Volumes (000s)
2015
2016
2017
2015
2016
2017
Racquet A
55
56
58
5.5
6.2
6.1
Racquet B
11
12
14
6.3
6.4
6.5
Racquet C
21
24
25
8.1
8.2
8.0
Racquet D
85
83
86
10.7
11.5
14.6
(a)
Calculate the base-weighted aggregate price indices for 2016 and 2017 (give your answer to
two decimal places).
[6 marks]
(b)
Calculate the current-weighted aggregate quantity indices for 2016 and 2017 (give your
answer to two decimal places).
[6 marks]
(c)
Calculate the base-weighted relative price index for 2017 only (give your answer to two
decimal places).
[5 marks]
(d)
List three advantages and/or disadvantages of using base weighting over current weighting.
[3 marks]
(Total: 20 marks)
Page 3 of 9
FN142: Financial Skills
(May/June 2018)
Question 3
A farmer has 10 acres in which to plant rice and maize. He has to plant at least 7 acres.
However, he has only £1,200 to spend and each acre of rice costs £200 to plant and each acre of
maize costs £100 to plant.
Moreover, the farmer has to get the planting done in 12 hours. It takes an hour to plant an acre of
rice and 2 hours to plant an acre of maize.
The profit is £500 per acre of rice and £300 per acre of maize.
(a)
Using R to represent rice and M to represent maize, state the objective function and write the
inequality constraints that the farmer must work within, to achieve the overall aim of
maximising profit.
[5 marks]
(b)
Using the graph paper provided, graph the constraints defined in part (a) using R as the xaxis. Label your graph and the constraints clearly and define the feasibility region.
[9 marks]
(c)
Using the graph, or otherwise, determine how many acres of each crop should be planted in
order to maximise profits. Fully explain your reasoning.
[4 marks]
(d)
Calculate the maximum profit the farmer can make within the given constraints and the
objective function in part (a).
[2 marks]
(Total: 20 marks)
Page 4 of 9
FN142: Financial Skills
(May/June 2018)
Question 4
The following table contains salary data for a team of six computer programmers and their length
of service with their employer:
Programmer 1
Length of service (years) Annual salary £(000) -x
y
3
40
Programmer 2
6
42
Programmer 3
9
43
Programmer 4
5
45
Programmer 5
3
44
Programmer 6
7
46
You are additionally given that Σ𝑥 = 33, Σ𝑦 = 260, Σ𝑥𝑦 = 1438, Σ𝑥 = 209, Σ𝑦 = 11290
(a)
Draw a scatter-graph of the “length of service” versus “annual salary”. Comment briefly on
the scatter graph.
[4 marks]
(b)
Find the correlation coefficient r for the salaries and lengths of service for the six
programmers by using the the Pearson product moment correlation coefficient (give your
answer to three decimal places).
[8 marks]
The grades/scores of 6 students in two subjects, History and Maths, are given in the table below:
Student
A
B
C
D
E
F
History grade
C
A*
C
B
D
A
Maths score
68
76
70
64
54
66
(c)
Calculate the coefficient of correlation rrank by the rank difference method (Spearman’s rank
coefficient). Give your answer to three decimal places.
[8 marks]
(Total: 20 marks)
Page 5 of 9
FN142: Financial Skills
(May/June 2018)
Question 5
Auto Shine Car Wash Ltd provides car valeting services at locations throughout the United
Kingdom. Each month, the Financial Controller is required to produce a report, summarising the
company’s performance in that month.
The table below shows May's sales figures (£000) at 50 of its branches:
(a)
Sales (£000)
Frequency
Less than 30
3
30 < 60
5
60 < 90
7
90 < 120
9
120 < 150
11
150 < 180
8
180 < 210
5
210 < 240
2
Total
50
For May, calculate
i.
ii.
The mean sales (£000)
The standard deviation of the monthly sales (£000)
[10 marks]
(b)
For April, the mean and standard deviation of the monthly sales figures were £120,100 and
£34,450 respectively. Compare the two months’ sales figures and briefly comment on them.
[3 marks]
(c)
Use the graph paper provided to draw an ogive for May’s sales figures.
[4 marks]
(d)
The company operates a bonus scheme under which each one of the 10 branches with the
highest sales is given £100 worth of shopping vouchers, which can then be allocated to a
member of staff at the branch manager’s discretion. Based on your ogive, estimate the
monthly sales figure needed to qualify for the bonus in May.
[3 marks]
(Total: 20 marks)
Page 6 of 9
FN142: Financial Skills
(May/June 2018)
Question 6
A firm has a choice of spending £10,000 today on one of two projects. The revenue obtained from
these projects is listed in the table below:
Revenue (£)
End of year
Project 1
Project 2
1
2,000
1,000
2
2,000
1,000
3
3,000
2,000
4
3,000
6,000
5
3,000
4,000
(a)
Assuming a discount rate of 8%, calculate the Net Present Value of these two projects and
recommend the project that should be invested in.
[10 marks]
(b)
Briefly explain two assumptions that are commonly made in Net Present Value calculations
when appraising alternative projects.
[4 marks]
(c)
For a separate project, the firm can make an investment at the present time of £12,500. This
project will generate one-off revenue totalling £18,000 in three years time. Calculate the
Internal Rate of Return (IRR) for this investment (give your answer to three significant
figures).
[6 marks]
(Total: 20 marks)
Page 7 of 9
FN142: Financial Skills
(May/June 2018)
Question 7
The HR Manager of a company believes that salaried staff, who get paid monthly, take more time
off work through sickness than those staff who are paid weekly based on the number of hours
worked (and do not belong to the company sickness scheme). To test this theory, the sickness
records for 561 randomly selected employees who have been in continuous employment for the
past year were analysed.
Number of days off sick
Type
employee
Less than 5 days
5 to 10 days
More
days
Monthly Paid
95
47
18
Weekly Paid
143
146
112
(a)
of
than
10
State the Null Hypothesis for this scenario based on the HR Manager’s assumption.
[1 mark]
(b)
Based on the data above, and assuming that the number off days sick and type of employee
are independent, calculate the expected values for each cell in the table.
[6 marks]
(c)
Comment briefly on the differences between the observed sample data (as provided in the
table above) and your calculated expected values.
[2 marks]
(d)
Calculate the Chi-squared (2) statistic for your data and use your 2 value to test (at 5%
significance level) whether there is an association between type of employee and number of
days off sick.
[10 marks]
(e)
Briefly state your conclusion from the test above.
[1 mark]
(Total: 20 marks)
Page 8 of 9
FN142: Financial Skills
(May/June 2018)
Question 8
The table below shows the number of overdue orders of a firm between the second quarter of 2014
and the first quarter of 2017:
Year
2014
2015
2016
2017
Quarter
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Overdue Orders
48
43
39
35
47
41
40
34
46
42
39
33
(a)
Using the data above, calculate the four-point moving average, the trend and seasonal
differences.
[8 marks]
(b)
Using your calculations from part (a), calculate the average seasonal differences and the
adjusted seasonal differences.
[4 marks]
(c)
Plot your actual data from the table above and your trend line, calculated in part (a), using
the graph paper provided.
[4 marks]
(d)
Extrapolate the trend line plotted in part (c) and using your calculations from part (b), forecast
the number of overdue orders the firm will have in the second and third quarter of 2017.
[4 marks]
(Total: 20 marks)
Page 9 of 9
FN142: Financial Skills
(May/June 2018)