MOD001021
2013/14
ANALYSIS OF BUSINESS
TUTORIAL CHAPTER 7
1.
We multiple a given future value by
4.
Which of the following reasons might
this in order to get its present value
result in the NPV and internal rate of return
equivalent.
criteria conflicting as to which of two
projects (A or B) to support?
Discounted value
The NPV curves for the respective
projects (A and B) do intersect above
the horizontal axis
The NPV curves for the respective
projects (A and B) do intersect below
the horizontal axis
The NPV curves for the respective
projects (A and B) do not intersect
below the horizontal axis
The NPV curves for the respective
projects (A and B) do not intersect
above the horizontal axis
Present value
Discount rate
Discount factor
2.
We use the formula:
To calculate the average rate of return
To calculate the internal rate of return
5.
To calculate the payback period
employees are normally distributed with a
To calculate the net present value
3.
The weekly salaries of a group of
mean of £200 and a standard deviation of
£40. What is the probability that the salary
The method of investment appraisal
which calculates that rate of discount which
of an employee taken at random will be
makes net present value = 0 for any project,
£250 or more?
is called:
0.3413
The reducing balance method
0.1056
The payback period
0.3944
The internal rate of return
0.2234
The average rate of return
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MOD001021
6.
What proportion of salaries are at
2013/14
9.
least £180 but no more that £230?
ANALYSIS OF BUSINESS
A random sample of 121 workers
taken from the management level of a
multinational corporation gives a mean
0.3830
annual salary of £50000 with a standard
0.2734
deviation of £9000. What is the 95%
0.1915
confidence interval for the population
0.4649
7.
mean?
The standard error of the mean is:
£47889 to £52111
The standard deviation of a
representative sample
£48686 to £51031
£48396 to £51604
The difference between the mean of all
sample means and the population
mean
The difference between the sample
mean and the population mean
£48969 to £51031
10 .
If the sample size in the previous
question had been increased to 169 (with
The standard deviation of the
distribution of means of all samples of
the same size
the same sample mean and standard
deviation), what would be the new 95%
confidence interval for the population
8.
The average monthly rent for student
mean?
accommodation is normally distributed with
£46234 to £52234
a mean of £280 and a standard deviation of
£48643 to £51357
£28. What is the probability that a sample of
£49702 to £52189
49 students will have a (sample) mean
£48228 to £51772
monthly rent of £287 or more?
0.4041
0.0401
0.0023
0.0499
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MOD001021
2013/14
ANALYSIS OF BUSINESS
11.
Chris claims that the average time
13.
A machine is supposed to fill 25 Kilo
students spend watching TV per week is 20.
bags of coal. A sample of 20 bags gives a
Emma says that it is more than this. A
mean of 25.51 kilos with a standard
sample of 100 students is taken. The
deviation of 2.19 kilos. Test the hypothesis
sample mean is 21.5 hours and the sample
that the machine is out of control at the 0.05
standard deviation is 8 hours. A hypothesis
level of significance. Which of the following
test at the 5% significance is used. Which of
is correct?
the following is true?
The alternative hypothesis is that m ¹
The null hypothesis is that m > 20
25 kilos and the null hypothesis should
hours and this hypothesis should be
be rejected
accepted
The alternative hypothesis is that m =
The null hypothesis is that m = 20
hours and this hypothesis should be
rejected
25.51 kilos and the null hypothesis
should be rejected
The alternative hypothesis is that m ¹
25 kilos and the null hypothesis should
be accepted
The null hypothesis is that m = 20
hours and this hypothesis should be
accepted
The alternative hypothesis is that m =
25 kilos and the null hypothesis should
be accepted
The null hypothesis is that m > 20
hours and this hypothesis should be
rejected
14.
The manager of a call centre is
worried that the average time spent on
telephone calls has increased above the
recommended 2 mins. A sample of 16 calls
gives an average length of 2.35 mins. With
a standard deviation of 0.4 mins. Is the
manager right to be concerned? Use the
0.01 level of significance and select the best
answer.
The alternative hypothesis is that m > 2
mins.and the null hypothesis should be
rejected
12.
The designers of a new model of
sports car claim that fuel consumption is 40
miles per gallon. The marketing department
wants to test this claim to see whether the
advertised figure should be higher or lower
than 40 miles per gallon. A sample of 50
cars yields a mean of 38.5 miles per gallon
and a standard deviation of 4 miles per
gallon. If we test the designers' claim at the
0.05 level of significance, which of the
following is true?
The alternative hypothesis is that m ¹
40 m.p.g and the null hypothesis
should be accepted
The alternative hypothesis is that m = 2
mins. and the null hypothesis should
be rejected
The alternative hypothesis is that m =
40 m.p.g and the null hypothesis
should be accepted
The alternative hypothesis is that m = 2
mins. and the null hypothesis should
be accepted
The alternative hypothesis is that m ¹
40 m.p.g. and the null hypothesis
should be rejected
The alternative hypothesis is that m >
2mins.and the null hypothesis should
be accepted
The alternative hypothesis is that m =
38.5 m.p.g. the null hypothesis should
be rejected
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MOD001021
2013/14
15.
A study of 100 industrial accidents finds the following pattern
Day
Monday Tuesday Wednesday Thursday Friday
Accidents
30
20
10
20
ANALYSIS OF BUSINESS
20
If the null hypothesis is that accidents are spread evenly throughout the week, which of the
following is correct?
Reject at both the 5% and 1% significance levels
Accept at the 5% significance but reject at 1% significance
Accept at the 1% significance but reject at the 5% significance
Accept at both the 5% and 1% significance levels
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