CAMBRIDGE INTERNATIONAL EXAMINATIONS
General Certificate of Education Advanced Level
Paper 3 Multiple Choice
Additional Materials: Multiple Choice Answer Sheet
Soft clean eraser
Soft pencil (type B or HB is recommended)
READ THESE INSTRUCTIONS FIRST
Write in soft pencil.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Write your name, Centre number and candidate number on the answer sheet in the spaces
provided unless this has been done for you.
There are thirty questions on this paper. Answer all questions. For each question there are four possible
answers A, B, C, and D.
Choose the one you consider correct and record your choice in soft pencil on the separate answer sheet.
Read the instructions on the Answer Sheet very carefully.
Each correct answer will score one mark. A mark will not be deducted for a wrong answer.
Any rough working should be done in this booklet.
Calculators may be used
This document consists of 11 printed pages and 1 blank page.
1 When a company calculates the net present value of proposed capital expenditure, which rate
does it use to discount annual income and expenditure?
cost to the company of providing the initial outlay
current rate of inflation
rate of interest payable on a bank overdraft
rate which will give the highest net present value
2 What is not included in cash flow statements?
foreign currency deposits
The table shows an extract taken from the final accounts of a limited company.
disposal of motor vehicle
net book value
part exchange value
The only acquisitions and disposals were those stated above.
What will be the net cash outflow as a result of these transactions?
A $103 500
B $108 500
C $110 000
D $115 000
4 When a company redeems shares, it may create a capital redemption reserve.
Why does it create this reserve?