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ECO329-october-2019

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4 views2 pages

ECO329-october-2019

Uploaded by

kehindej61
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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NATIONAL OPEN UNIVERSITY OF NIGERIA

FACULTY OF SOCIAL SCIENCES


DEPARTMENT OF ECONOMICS
COURSE TITLE: PROJECT EVALUATION
COURSE CODE: ECO 329
UNITS: 3
TIME ALLOWED: 3 HOURS
INSTRUCTION: ANSWER FOUR (4) QUESTIONS. ALL QUESTIONS CARRY
EQUAL MARKS

QUESTION ONE
(ai). Define the term “Project” in project evaluation. (2½ marks)
(aii). Discuss Four (5) characteristics of a Project in Project Evaluation (10marks)
(b). Discuss the different types of Evaluation in Project analysis. (5marks)
(17½marks)

QUESTION TWO
(a). Discuss whether banks are interested in projected cash flow statement of a project.
(5½marks)
(b). Discuss the stages of Project Life Cycle in project analysis. (12marks)
(17½marks)

QUESTION THREE
(a). Discuss the term „project cost analyses„ in project evaluation. (10marks)
(bi). Discuss the term „capacity planning‟ in project analysis. (5½marks).
(bii). Make a clear distinction between Gross Profit margin and Net Profit Margin. (2marks)
(17½marks)

QUESTION FOUR
(a). Discuss the payback period as a popular methods of project evaluation. (3½marks)
(bi). A project requires a cash outlay of N800, 000 and yields an annual cash inflow of N100,
000 for a period of 10 years; calculate the payback period. (5marks)
(bii). Discuss the tools and techniques that project managers can use to ensure knowledge and
lessons learned from previous projects are not lost, and can be shared for the benefit of
future projects. (9marks).
(17½marks)

1
QUESTION FIVE

(a). Analyse the Discounted Cash Flow (DCF) technique for appraising large investment
decision. (5½marks).
(b). A car manufacturer has decided to make a significant investment into expanding its
presence in Africa by setting up a large assembly facility in Nigeria. It has estimated its
initial set up costs to be in the region of Nigeria naira N6.398M.
Forecast net income from the project is detailed below:
Year 1 - 1.400M
Year 2 - 1.450M
Year 3 – 1.550M
Year 4 – 1.625M
Year 5 – 1.480M. You are required to
(i). Calculate the projected payback time for the project to the nearest month. (2marks)
(ii). Calculate the Net Present Value of the project using a discount factor of 5% and comment on
the attractiveness of the project.
Discount factors at 5% are; Yr 1 = 0.952, Yr 2 = 0.907, Yr 3 = 0.864, Yr 4 = 0.823, Yr 5 = 0.784
(10marks)
(17½marks)

QUESTION SIX
Write short note on the following:

(a) Speculative Risk (3.5marks)


(b) Operational Risk (3.5marks)
(c) Subjective and Objective Risk (3.5marks)
(d) Social Profitability (3.5marks)
(e) Operating Profit Margin (3.5marks)
(17½marks)

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