ACCA考试的时候必须要英文作答吗？

The IOA Division is also considering whether to undertake an investment in the West of the country (the West Project).

An initial cash outlay investment of ￡12 million will be required and a net cash inflow amounting to ￡5 million is

expected to arise in each of the four years of the life of the project.

The activities involved in the West project will cause the local river to become polluted and discoloured due to the

discharge of waste substances from mining operations.

It is estimated that at the end of year four a cash outlay of ￡2 million would be required to restore the river to its

original colour. This would also clear 90% of the pollution caused as a result of the mining activities of the IOA

Division.

The remaining 10% of the pollution caused as a result of the mining activities of the IOA Division could be cleared

up by a further cash outlay of ￡2 million.

(c) Evaluate the West project and, stating your reasons, comment on whether the board of directors of NCL plc

should spend the further ￡2 million in order to eliminate the remaining 10% of pollution. (6 marks)

(Ignore Taxation).

2 Ice-Time Ltd (ITL) manufactures a range of sports equipment used in a variety of winter-sports in Snowland.

Development engineers within ITL have recently developed a prototype of a small engine-propelled bobsleigh named

the ‘Snowballer’, which has been designed for use by young children. The directors of ITL recently spent ￡200,000

on market research, the findings of which led them to believe that a market exists for the Snowballer.

The marketing director has suggested that ITL should use the ‘Olympic’ brand in order to market the Snowballer.

The finance director of ITL has gathered relevant information and prepared the following evaluation relating to the

proposed manufacture and sale of the Snowballer.

(1) Sales are expected to be 3,200 units per annum at a selling price of ￡2,500 per unit.

(2) Variable material, labour, and overhead costs are estimated at ￡1,490 per unit.

(3) In addition, a royalty of ￡150 per unit would be payable to Olympic plc, for the use of their brand name.

(4) Fixed overheads are estimated at ￡900,000 per annum. These overheads cannot be avoided until the end of the

year in which the Snowballer is withdrawn from the market.

(5) An initial investment of ￡5 million would be required. A government grant equal to 50% of the initial investment

would be received on the date the investment is made. However, because the Snowballer would be classified as

a luxury good, no tax allowances would be available on this initial investment. The estimated life cycle of the

Snowballer is six years.

(6) Corporation tax at the rate of 30% per annum is payable in the year in which profit occurs.

(7) All cash flows are stated in current prices and, with the exception of the initial investment and the government

grant, will occur at the end of each year.

(8) The nominal cost of capital is 15·44%. Annual inflation during the period is expected to amount to 4%.

Required:

(a) Calculate the net present value (NPV) of the Snowballer proposal and recommend whether it should be

undertaken by the directors of ITL. (4 marks)

(d) Explain the term ‘environmental management accounting’ and the benefits that may accrue to organisations

which adopt it. (4 marks)