Question 1: A project has an IRR of 12%, while the firm’s WACC is 10%. Should the company pursue this project?

Question 2: Why is money worth more now then in the future?

Question 3: Why are budgets prepared?

Question 4: A website designer intends to design a website for business students. The initial design costs are $1,000. He forecasts cash inflows of $300 per year for 5 years and cash outflows of $95 per year. What must he sell the website for at the end of year 5 to achieve an NPV of $300? Discount rate is 10%

Question 5: In 2010 THY Limited forecasted sales of 8,000 units at an average sale price of $10. Variable costs are expected to be $5.50 per units and fixed costs are expected to be $40,000. Given that sales were in fact 10,000 units at a price of $11, variable costs were 50,000 and fixed costs were $48,000, what was:

a. The overall budget variance

b. Sales volume variance

c. Individual flexed budget variance

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