1 (a)    Prepare a corrected statement of the incremental cash flows arising from the project. Where you have altered the assistant?s figures you should attach a brief note explaining your alterations. (7 marks)
(b)    Calculate:
(i)    The project?s payback period.
(ii)    The project?s net present value as at 31 December Year 0. ((6 marks)
(c)    Write a memo to the board advising on the acceptance or rejection of the project.

2 (a)    Identify and discuss the major factors that a bank would take into account before deciding whether to grant an increase in the overdraft of a business. (10 marks)
(b)    State whether, in your opinion, the bank should grant the required increase in the overdraft for Gainsborough Fashions Ltd. You should provide reasoned arguments and supporting calculations where necessary.

3 (a)    Show the managing director, by using the data given, how you would calculate ratios that could be used to measure inventories and trade receivables levels during last year and this year. (6 marks) income statement
(b)    Discuss the ways in which the management of Sparkrite Ltd could exercise control over
(i)    inventories levels;
(ii)    Trade receivables levels.

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