3c FBSM
21 May 2001
Day 1 late afternoon
INSTRUCTIONS TO CANDIDATES
Maths Tables and Formulae are provided elsewhere on the website, but were included within
the printed question paper.
Write your examination number in the boxes provided on the front of the answer book.
Write FBSM on the line marked "Subject" on the front of the answer book.
Write your examination number on the special answer sheet for section A which is on page 3 of
this question paper booklet.
Detach the sheet from the booklet and insert it into your answer book before you hand this in.
Do NOT write your name or your student registration number anywhere on your answer book.
Tick the appropriate boxes on the front of the answer book to indicate which questions you have
answered.
Each of the sub-questions numbered from 1.1 to 1.25 inclusive, given below, has only ONE correct
answer.
Question One
1.1 The numbers of rejects from 50 samples of the same size is as follows:
A 22 B 24 C 3 D 20
1.2 The unit price of Brand X in May 2000 and May 2001 was as follows:
The price relative for Brand X in May 2001, with base May 2000 = 100 is
1.3 On which ONE of the following graphics can the median readily be found without further
calculation?
A Bar chart
B Cumulative frequency curve
C Histogram
D Pie chart
1.4 A retailer buys a box of a product, which nominally contains Q units. The planned selling
price of each unit is P. If both P and Q have been rounded to 10%, then the maximum
rounding error in total revenue is
The telephone costs (to the nearest ) to be allocated to Finance will be closest to
2CD
1.4 The formula Q = is used in stock control.
H
1.7 A companys market for computer supplies has trebled in value in exactly six years. The
annual equivalent percentage growth rate in this market is (to 2 decimal places) closest to
1.8 The following statements are often made about simple random sampling.
A (i) only B (ii) only C Both (i) and (ii) D Neither (i) nor (ii)
1.9 A machine was purchased for 100,000. Depreciation is calculated using the reducing
balance method (that is, a constant percentage is applied each year to the written down
value). In the last balance sheet, the net book value of the machine, exactly four years old,
was shown as 50,000.
In the next balance sheet the machine should be shown to have a net book value, rounded to the
nearest 100, closest to
M2001 3 FBSM
1.11 Each of the following diagrams shows a histogram of data with equal area. The vertical
and horizontal scales of each histogram are identical.
A B
Employees Employees
0 Wages 0 Wages
C D
Employees Employees
0 Wages 0 Wages
1.12 The lengths of steel rods are Normally distributed with a mean of 100mm and a standard
deviation of 5mm.
The percentage of steel rods with a length of less than 95mm is closest to
1.13 The calculation of a rank correlation coefficient [formula given in the Mathematical Tables
sheet 3 on page 19], shows that ten pairs of data are found to be perfectly negatively
correlated.
X is closest to
1.15 The quarterly sales (units) of a company are given in the table below.
Year Q1 Q2 Q3 Q4
1997 13 52 56 79
1998 29 43 48 80
1999 24 55 46 75
Which is true?
A (i) only B (i) and (ii) only C (ii) and (iii) only D (i), (ii) and (iii)
1.16 An accountant has to check a sample of invoices. The invoices are divided into three
groups, by value: under 100, 100 500 and over 500. Samples are then
selected randomly from each group.
Y=7+X Y = 9 + 3X
A scatter diagram shows the weekly total costs of production () in a certain factory plotted
against the weekly output (units). A broadly linear pattern is evident, with r = 09. The
regression equation is
COSTS = 1,500 + (15 x OUTPUT).
Fifty data points have been included in the analysis, with output ranging from 100 units to 1,000
units. Output next week is planned to be 500 units.
M2001 5 FBSM
Which one of the following is true, all other things being equal?
A (i) and (ii) only B (i) and (iii) only C (ii) and (iii) only D (i), (ii) and (iii)
(i) There is very little correlation between weekly costs of production and production
level.
(ii) 90% of the variation in weekly costs is attributable to the amount produced.
(iii) Given the information, any forecast using the regression equation is likely to be very
unreliable.
A (ii) only B (i) and (iii) only C (ii) and (iii) only D None of them
1.20 Three independent experts have estimated the probability of a companys future annual
sales:
The highest expected value for the companys estimated annual sales is given by
10 11 12 13 14 16 17 18 19 20+X
A 5 B 4 C 3 D 2
A (ii) only B (i) and (ii) only C (i) and (iii) only D (ii) and (iii) only
1.24 The following data represents a time series for the last seven days:
2 6 10 6 10 14 10
Which ONE of the following moving averages would result in a straight-line graph?
1.25 Three people are carrying out independent functions during an internal audit. It is known
that in each of the three separate areas being investigated there is a serious error. From
past experience, it is estimated that the (independent) chances of the individuals finding
the serious error in their area are 08, 07 and 06.
The probability that at least one of the serious errors will be found is
Total = 50 marks
M2001 7 FBSM
Question Two
A Health and Fitness Centre has to buy one of two types of machine, A or B. Machine A would
cost 200,000, half of which would be due on delivery, the remainder a year later. Machine B
would cost 240,000, with payment due in the same way as for machine A. Both machines last
for 6 years and have an expected scrap value of 10% of their original cost price. Taking into
account operating costs and maintenance, machine A would produce year-end net operational
cash flows of 40,000 and machine B year-end net operational cash flows of 50,000. In both
cases the relevant cost of capital is 10% each year.
Required:
(a) Calculate the net present value of each machine.
(11 marks)
(b) Recommend which machine should be bought, giving your reasons and assumptions.
(4 marks)
(c) Estimate the internal rate of return for your recommended machine, using a graph or
calculation, and state its meaning.
(10 marks)
(Total = 25 marks)
FBSM 10 M2001
Sales Q1 Q2 Q3 Q4
1998 105 95 150 250
1999 80 70 110 180
2000 50 50 70 110
2001 30
Q1 Q2 Q3 Q4
Average seasonal variations for the years
1998 2001 -40% -40% 0 +80%
Required:
(a) Plot a time series graph of the unit sales, and include the trend on the same graph.
(10 marks)
(b) Forecast the unit sales for the second, third and fourth quarters of 2001, and comment on
the reliability of these forecasts.
(8 marks)
(c) Interpret the key factors in this game's unit sales, 1998 2001.
(7 marks)
(Total = 25 marks)
M2001 11 FBSM
Required:
(a) Prepare a 5 x 5 contribution table for each production / demand combination and calculate
the expected contribution for each level of production.
(20 marks)
(b) Recommend, with reasons and comments, the most suitable production policy for the
bakery.
(5 marks)
(Total = 25 marks)
End of paper
FBSM 12 M2001
3c FBSM
19 November 2001
Day 1 late afternoon
INSTRUCTIONS TO CANDIDATES
Answer the ONE question in section A (this has 25 sub-questions, and is on pages 2 7).
Answer TWO questions ONLY from section B (these questions are on pages 8 10).
Maths Tables and Formulae were provided in the printed question paper and are available
elsewhere on the website.
Write your examination number in the boxes provided on the front of the answer book.
Write FBSM on the line marked "Subject" on the front of the answer book.
Write your examination number on the special answer sheet for section A. Detach the sheet
from the booklet and insert it into your answer book before you hand this in.
Do NOT write your name or your student registration number anywhere on your answer book.
Tick the appropriate boxes on the front of the answer book to indicate which questions you have
answered.
Each of the sub-questions numbered from 1.1 to 1.25 inclusive, given below, has only ONE
correct answer.
Question One
1.1 The sales of a product increase at a rate of 1% each month, month on month, for a
year. This is equivalent to an annual percentage rate of expansion closest to
1.3 The numbers of hours worked last week by a companys 11 employees were:
P Q R S T U V W X Y Z
35 36 36 36 40 38 40 37 35 42 43
A 36 B 37 C 38 D 39
1.5 A 1% random sample of mail order customers, each with a serial number, is to be
selected. A random number between 00 and 99 is chosen, and turns out to be 29.
Customers with serial numbers 29, 129, 229, 329 and so on are then selected to be the
sample.
When the formula is rearranged, with N in terms of the other letters, N is equal to
2PC 2PC - 1
A 1 B C 2PC 1 D none of these
RB RB
1 1
1.7 The formula S 2 1 simplifies to
1 1 1 1
S2 10S 2
A
1 1 B S2 C
1 1 D 10 S 2
1.8 A garage has experienced the following regular weekly demand for its hire cars over the
last 50 weeks:
1.9 In the equation C = 6 + 05Q, C denotes the total cost of sales (in thousands of $) and Q
denotes the number of units sold (in thousands).
1.10 The rank correlation coefficient between the ages and the scrap values of a certain type
of machine equals 1.
The percentage of the batch which is longer than 285 millimetres is closest to
1.12 A $20,000 new car depreciates in value by 20% 2% each year (year-end). (The car
depreciates by the reducing balance method, which means that a constant percentage
is applied each year to the written down value.)
1.13 A traders weekly costs, TC, are less than or equal to $100. Weekly revenue, R, is a
minimum of $120.
1.14 A company has to repay a mortgage by making 10 year-end payments of $50,000. The
compound interest rate is fixed at 8% each year.
1.15 Read the following statements about the period 1998 to 2001:
A (i) only B (ii) only C Both (i) and (ii) D Neither (i) nor (ii)
1.16 Real wages are money wages that have been adjusted for inflation, that is, deflated.
Over the period 1998 to 2001, real wages have (approximately)
A remained unchanged.
B decreased by 143%.
C decreased by 167%.
D increased by 145%.
b (b 2 4ac )
1.17 If aX + bX + c = 0, then X =
2a
If X 2X 24 = 0, then X equals
2 10 2 92 2 96 2 10
A B C D
2 2 2 2
1.20 The forecast for the fourth quarters sales (units), Q4, in 2001, assuming the trend
pattern continues, is closest to
1.21 The staff in the Complaints Department of an airline are available to answer the
telephone at random times, which amount to 20% of the working day on average.
The probability that a customers call is answered for the first time, on their fifth attempt is
5 4 4
A (02) B (02) (08) C (08) (02) D 1
1.22 The probability that a randomly-selected Brand X buyer is from the North and under 25
years of age is (to 2 decimal places)
1.23 The probability that a randomly-selected Brand X buyer is from the West or under 25
years of age is (to 2 decimal places)
1.24 The probability that a randomly-selected Brand X buyer, who is under 25 years of age,
is from the South is (to 3 decimal places)
1.25 The probability that two randomly-selected Brand X buyers are both under 25 years of
age is (to 2 decimal places)
(Total = 50 marks)
Question Two
A factory's monthly production costs and output from a production line for circuit boards are as
follows:
Jan Feb Mar April May June July Aug Sept Oct
Output X (units) 200 150 400 450 50 500 150 350 100 250
Costs Y (000) 10 9 12 14 5 16 10 14 6 10
Required:
(a) (i) Draw on graph paper a scatter diagram of costs against output.
[Do not draw in your "line of best fit".]
(6 marks)
(ii) Comment on your diagram.
(2 marks)
(b) (i) Calculate the least-squares regression of costs on output and plot this line on the
diagram.
(6 marks)
(ii) Explain the meaning of your regression line.
(3 marks)
(c) Estimate approximate values for the correlation coefficient, and r-squared, and explain their
meanings.
[Do not calculate the value of r.]
(3 marks)
(d) The planned output of the factory for November is 300 circuit boards.
(i) Forecast the costs for November.
(2 marks)
(ii) Discuss the reliability of your forecast.
(3 marks)
(Total = 25 marks)
Required:
(a) Tabulate these data as a frequency distribution, using seven class intervals of equal width.
(7 marks)
(b) Plot an ogive (a "less than" cumulative frequency curve) for your distribution on graph
paper, and clearly label the positions (locations) of the median and the quartiles.
(8 marks)
(c) From the graph, estimate the numerical values of the median and the quartiles in (b) and
briefly explain their meaning.
(6 marks)
(d) The cost of the Help Line service to the Technical Support department is 5 each call.
Assume there are 300 working days in the year.
Calculate an estimate of the annual cost of the Help Line, and comment on the reliability of
your estimate.
(4 marks)
(Total = 25 marks)
Required:
(i) Calculate the size of the quarterly sum required for the Fund.
(8 marks)
(ii) Demonstrate simply why your answer is reasonable.
(2 marks)
(b) A company is considering the purchase of one of two machines, A or B, for 180,000. The
terms of payment for each machine are 90,000 on delivery and 90,000 a year later. The
machines are expected to produce year-end net cash flows as follows:
Time (end of year) 1 2 3 4 5
Net cash flow of A (000) 60 50 40 30 20
Net cash flow of B (000) 40 40 40 40 40
At the end of year 5, either machine would be sold for 20,000. The annual cost of capital
is 9% for each year.
Required:
(i) Calculate the net present value of each machine.
(12 marks)
(ii) Recommend which machine should be purchased, and explain why.
(3 marks)
(Total = 25 marks)
End of paper
3c FBSM
20 May 2002
Day 1 late afternoon
INSTRUCTIONS TO CANDIDATES
Read this page before you look at the questions
You are allowed two hours to answer this question paper. All questions are compulsory.
Answer the ONE question in section A (this has 25 sub-questions and is on pages 2-11)
You are advised to spend 10 minutes reading through the paper before starting to answer the questions.
You should spend no more than 55 minutes on answering the ONE question in section A, which has 25
sub-questions.
You should spend no more than 55 minutes on answering the THREE questions in section B.
Hand this entire booklet to the invigilators at the end of the examination. You are NOT permitted to leave
the examination hall with this booklet.
Do NOT write your name or your student registration number anywhere on this booklet.
TURN OVER
Each of the sub-questions numbered from 1.1 to 1.25 inclusive, given below, has only ONE correct
answer.
REQUIRED:
Place a circle O around the letter A, B, C or D that gives the correct answer to each sub-question.
If you wish to change your mind about an answer, block out your first answer completely and then circle
another letter. You will NOT receive marks if more than one letter is circled.
Please note that you will NOT receive marks for any workings to these sub-questions. Sufficient space
has been provided for you to do your workings where these sub-questions require them.
Question One
1.1 An index number increases each year by 10% of its value in the previous year. If its value in 1999 was
120, its value in 2002 is closest to
1.2 In a time series of the unit sales of shoes, random variation could be caused by
A a general trend.
1.5 For a certain group of students, the coefficient of rank correlation between their performance in
Accounting and their performance in Law is 1. The coefficient of rank correlation between their
performances in Law and FBSM is also 1. Therefore, the coefficient of rank correlation between their
performance in Accounting and their performance in FBSM is
A 2
B zero
C +1
TURN OVER
1.8 The diagram below shows an ogive (cumulative frequency) for a sample of 400 items.
400
300
Cumulative
frequency
0 X
K
Which of the following statistics has the same value in both samples?
1.10 A companys market value has fallen from 32 billion to 2 billion in four years. The average annual
percentage decline in market value is closest to
1.11 Y
8 x
x x
6 x x
x x
4 x xx
x x
2 xx
x x
0 4 8 12 X
On the basis of the scatter diagram above, which of the following equations would best represent the
regression line of Y on X?
A Y = X + 8 B Y=X+8 C Y=X8 D Y = X 8
TURN OVER
For office use only Total 1.9 1.10 1.11
Marks awarded (First marker) for each sub-question
Marks awarded (Second marker) for each sub-question
May 2002 5 FBSM
A Select every tenth CIMA student to arrive at their college/institute on one specific day.
B Select randomly, using random number tables, one in ten of every CIMA class.
C Select 10% of colleges/institutions providing CIMA courses, then from these choose all students who
are registered with CIMA.
D Select 10% of all students registered with CIMA, giving each a chance of 01 of being picked.
1.13 Two groups of stock, K and L, are valued. The first group, K, is valued at 10,000 5% and the
second group, L, is valued at 20,000 10%.
The maximum percentage error in the combined (K + L) stock valuation of 30,000 is closest to
1.14 The sales of a product are recorded monthly for 24 months. The four-point (centred) moving averages
are calculated and plotted on a graph.
A 20 B 21 C 22 D 24
A 1 B 1 C 1 D 1
12 6 4 2
Number of invoices: 60 30 40 40 20 10 0
A 18 B 2 C 21 D 3
TURN OVER
V
R = +G
P
When the formula is rearranged, with P in terms of the other variables, P is equal to
R (R G) V V
A G B
V C G
D
(R G)
V R
1.21 A fixed-interest $200,000 mortgage, with annual interest compounded at 6% each year, is to be repaid
by 15 equal year-end repayments of $R.
TURN OVER
1.23 You borrow 3,000 and pay 10% each year interest. Ignoring capital, if you pay this interest at the
end of each year, what is the present value of the interest payable at the end of the third year?
In a large batch, the percentage of boxes containing no faulty components will be closest to
1.25 A new lake is to be stocked with fish, according to the numbers in the table below.
Type of fish A B C D
Number of fish 400 300 200 100
Annual % increase 10 20 30 40
After one year, the percentage of fish of Type D in the lake will be closest to
(Total = 50 Marks)
End of Section A
TURN OVER
IMPORTANT
MARKS ARE AWARDED FOR CORRECTLY COMPLETING THE SHADED BOXES WITH THE
CORRECT ANSWER WHERE A MARK IS INDICATED IN THE RIGHT-HAND COLUMN.
THERE ARE NO MARKS FOR COMPLETING THE MISSING FIGURES WHERE NO MARK IS
INDICATED, BUT COMPLETING THESE WILL HELP YOU OBTAIN THE CORRECT ANSWERS.
DO NOT WRITE IN THE MARGINS NOR IN THE COLUMNS FOR USE BY MARKERS.
Question Two
In two years from now, some equipment in your company will need replacing. You estimate that 400,000 in
cash, then, will be required to do this. Your company has three alternative options for achieving this sum.
The rate of interest will be 35% per quarter over the next 2 years, in all three options. Interest will be
compounded every quarter.
Option (1) Invest X now, so that the investment grows to 400,000 in two years.
Option (2) Put 25,000 into a Reserve Fund (RF1) every quarter, starting now (that is, 9 deposits are
made), and borrow the shortfall (the amount by which the Reserve Fund (RF1) falls short of its
target of 400,000).
Option (3) Put Y into a Reserve Fund (RF2) at the end of every quarter for two years, to achieve the
target of 400,000 exactly.
A geometric series of n terms, with first term A and common ratio R, is denoted by:
2 3 4 n-1
A + AR + AR + AR + AR + + AR .
Do not write in these
A (R n 1) columns below
The sum of this series is given by: Sn =
(R 1)
2
Sub-total:
2
TURN OVER
The unit sales of a toy for the last nine quarters are given below:
The (moving-average) trend in unit sales is approximately linear and described by the equation
Sales = 110 + 10T
where T = 1 denotes the first quarter, Q1, of 2000, T = 2 denotes the second quarter, Q2, of 2000, and so on.
The unit sales of the toy over the last few years have been analysed in two different ways: firstly, using the
additive model and, secondly, using the multiplicative model. The average seasonal variations for the two
models are as follows:
Quarter Q1 Q2 Q3 Q4
Additive model (units) -80 +40 +60 -20
Multiplicative model -40% +20% +30% -10%
The underlying business conditions are not expected to change during the Do not write in these
next two quarters. columns below
2
Sub-total:
6
(f) Explain when it is appropriate to use a multiplicative model for
forecasting in no more than 30 words (in the shaded area below).
2
Sub-total:
14
The mail-order sales (units) of Brand X in a certain country are shown below. In this country, the populations
of all the twenty sub-groups are equal. Each customer buys one unit. Ages are given in years.
2
(f) For the North and South, what is the rank correlation
coefficient between sales and age? 2
2
Sub-total:
11
FBSM
Business Mathematics
3c FBSM
18 November 2002
Day 1 late afternoon
INSTRUCTIONS TO CANDIDATES
Read this page before you look at the questions
You are allowed two hours to answer this question paper. All questions are compulsory.
Answer the ONE question in section A (this has 25 sub-questions and is on pages 2 9).
Answer the THREE questions in section B (these are on pages 10 15).
Maths Tables and Formulae wee provided within the question paper and are available elsewhere on the website.
You are advised to spend 10 minutes reading through the paper before starting to answer the questions.
You should spend no more than 55 minutes on answering the ONE question in section A, which has 25 sub-
questions.
You should spend no more than 55 minutes on answering the THREE questions in section B.
Hand this entire booklet to the invigilators at the end of the examination. You are NOT permitted to leave the
examination hall with this booklet.
Do NOT write your name or your student registration number anywhere on this booklet.
Each of the sub-questions numbered from 1.1 to 1.25 inclusive, given below, has only ONE correct answer.
REQUIRED:
Place a circle O around the letter A, B, C or D that gives the correct answer to each sub-question.
If you wish to change your mind about an answer, block out your first answer completely and then circle
another letter. You will NOT receive marks if more than one letter is circled.
Please note that you will NOT receive marks for any workings to these sub-questions. Sufficient space has
been provided for you to do your workings where these sub-questions require them.
Question One
1.1 a 2x
The expression simplifies to
a 2y
A a2x/y B a(x-y)/2 C a2(x-y) D a2(x+y)
1.2 QH DS
=
2 Q
1.3 The total profit, P, of an organisation is related to output (x units) by the expression:
P = 40 + 11x 2x2
Week Sales
000
1 200
2 240
3 250
4 220
5 230
6 260
1.5 The 2nd four-point centred moving average for the sales data will be
1.6 Assuming an additive model, and based on the information given, the seasonally-adjusted sales figure
(000) for week 4 will be
A 0 B 25 C 30 D 50
1.8 The arithmetic mean number of houses sold per week was
A 0 B 25 C 30 D 50
1.9 The following information shows the daily sales revenue (000) of a company producing a particular
item of clothing, over a period of two years:
Sales Frequency
000 %
0 to under 10 5
10 to under 20 20
20 to under 30 60
30 to under 40 10
40 to under 50 5
A 22 B 24 C 26 D none of these.
A 8 ( 4) B 8 ( 3) C 8 ( 2) D 8 ( 1)
1.11 In order to carry out a survey into the spending habits of the population living in a certain region of the
United Kingdom, a sample of individuals is to be selected. The population can be categorised
according to age group ("under 18", "18 to under 30", "30 to under 60", "60 and above"). The sample
will consist of 05% of the membership of each age group. This method of sampling is an example of
1.12 For a set of six pairs of observations for the variables X (number of employees in hundreds) and Y
(product sales in thousands of units), the following results were obtained:
X = 1 Y = 15 X2 = 15 Y2 = 65 XY = 7
1.13 The percentage increase in the price between 1997 and 1999 is nearest to
1.14 It has been decided to rebase the index so that 1998 = 100. The index for 2000 will now be nearest to
1.15 In any given week, the probability that the overtime cost will exceed 1,000 is
1.16 In any given week, the probability that the overtime cost will be between 700 and 900 is
1.17 In 10% of weeks, the overtime cost will approximately fall below
1.18 The cash value of the account, to the nearest , at the end of five years will be
1.20 An individual who expects to retire in five years' time, estimates that his company pension will be
15,000 per year. Each year's pension will be paid as a lump sum at the end of the year. If current
interest rates are 6%, then the present value of the first year's pension, to the nearest 5, will be
1.21 A credit card company states that its nominal annual interest rate is 18%. If interest is charged
monthly at 15%, then the annual percentage rate (APR), correct to 2 decimal places, will be
1.23 The probability that both components will not work correctly is
1.24 The probability that only one component will work correctly is
1.25 The probability that at least one component will work correctly is
Total = 50 Marks
IMPORTANT
MARKS ARE AWARDED FOR CORRECTLY COMPLETING THE SHADED BOXES WITH THE
CORRECT ANSWER WHERE A MARK IS INDICATED IN THE RIGHT-HAND COLUMN.
THERE ARE NO MARKS FOR COMPLETING THE MISSING FIGURES WHERE NO MARK IS
INDICATED, BUT COMPLETING THESE WILL HELP YOU OBTAIN THE CORRECT ANSWERS.
DO NOT WRITE IN THE MARGINS NOR IN THE COLUMNS FOR USE BY MARKERS.
ADDITIONAL SPACE FOR WORKINGS OR NOTES IS AVAILABLE ON PAGES 16 19.
Question Two
At the close of business on the last working day of each month, the Manager of a branch of a bank
requires his staff to produce a brief summary of the account balances. These monthly figures are
intended to form the basis of the Manager's quarterly report which is then used by the head office for
planning purposes. To provide this information, the accounts of a randomly selected sample of 100
customers are examined. The details for one month are shown in the table below.
Class Class
Account balance
mid-point frequency fx fx2
000
x f
0 to less than 2 1 10
2 to less than 4 3 40 A B
4 to less than 6 5 30
6 to 8 7 20
Total () 100 420 2,100
B 2
100
90
80
Cumulative Frequency
70
60
50
40 2
30
20
10
0
0 2 2 4 4 6 6 8 8
Account balance (000)
sub-total:
9
Total Marks for Question Two = 17
Space for workings (additional space for workings is available on pages 16 19)
The Production Manager of a large manufacturing company is concerned about the apparent increasing
maintenance costs of the production machinery. There is a feeling that there may be a relationship
between the ages of the individual machines and their annual maintenance costs.
In order to examine this theory in more detail, the following information has been collected for a
randomly selected sample of 8 machines currently in operation:
Machine A B C D E F G H
Age in years (X) 2 5 8 2 3 7 4 10
Maintenance costs (000) (Y) 3 8 12 5 7 10 8 13
Scatter Diagram
14
13
Maintenance costs (000)
12
11
10
9
8
7
6
5 2
4
3
2
1
0
0 1 2 3 4 5 6 7 8 9 10 11
Age (years)
(ii)
sub-total:
4
b= 2
b:
(ii) Comment on the reliability of your forecast. (Do not exceed 30 words.)
sub-total:
13
Total Marks for Question Three = 17
Space for workings (additional space for workings is available on pages 16 19)
(a) A company borrowed 50,000 to buy some new equipment. Interest on this loan is compounded
annually at 9%. The company is required to pay off the loan by making a single payment after five
years.
In order to have the cash available to make this payment, it has decided that annual payments will be
made into a sinking fund that compounds interest annually at 5%. The first payment into the fund will be
made one year after the loan was taken out, and the last payment will be made on the day the loan is
repaid.
The table below shows how the debt and sinking fund will grow during the five years:
A 2
B 2
C 3
D 3
sub-total:
10
Note: A geometric series of n terms, with first term A and common ratio R, is denoted by:
A + AR + AR2 + AR3 + + ARn 1
n
A(R 1)
The sum of this series is given by: Sn =
(R 1)
3c FBSM
19 May 2003
Monday late afternoon
INSTRUCTIONS TO CANDIDATES
Read this page before you look at the questions
You are allowed two hours to answer this question paper. All questions are compulsory.
Answer the ONE question in section A (this has 25 sub-questions and is on pages 2-13)
Maths Tables and Formulae were provided with the printed question paper, and are available elsewhere
on the website
You are advised to spend 10 minutes reading through the paper before starting to answer the questions.
You should spend no more than 55 minutes on answering the ONE question in section A, which has 25
sub-questions.
You should spend no more than 55 minutes on answering the THREE questions in section B.
Hand this entire booklet to the invigilators at the end of the examination. You are NOT permitted to leave
the examination hall with this booklet.
Do NOT write your name or your student registration number anywhere on this booklet.
Each of the sub-questions numbered from 1.1 to 1.25 inclusive, given below, has only ONE correct
answer.
REQUIRED:
Place a circle O around the letter A, B, C or D that gives the correct answer to each sub-question.
If you wish to change your mind about an answer, block out your first answer completely and then circle
another letter. You will NOT receive marks if more than one letter is circled.
Please note that you will NOT receive marks for any workings to these sub-questions. Sufficient space
has been provided for you to do your workings where these sub-questions require them.
Question One
2C oD
EOQ =
Ch
1.1 If Co = 2 per order, D = 1,000 items and Ch = 025 per item, then EOQ (rounded to the nearest
whole number) will be
1.2 If, for a different stock item, EOQ = 200 items, Co = 4 per order and D = 1,000 items, then Ch (in per
item) will be
1.4 The production costs per unit of a certain commodity are 20 ( 2) and the selling price per unit is
35 ( 3). In any given week, the sales are 90 ( 10) units. On the basis of this information, the
maximum profit per week is
1.5 If two of the invoices are selected at random, then the probability (correct to 2 decimal places) that
neither of them will contain an error is
1.6 If two of the invoices are selected at random, then the probability (correct to 2 decimal places) that at
least one of them will contain an error is
1.7 The median number of days of absence due to sickness per employee will be nearest to
1.8 If the upper quartile is 11 days, and the lower quartile is 1 day, then the quartile deviation will be
1.9 In the current financial year, an employees net income is 15,360, after total deductions of 40% from
her gross income. In the last financial year, her gross income was 23,400. In percentage terms, the
increase in her gross income is
1.10 The following table of index numbers shows how the production of a particular model of motorboat at a
boat builders has changed over the period August 2002 to February 2003, with January 2002 = 100:
If the actual production figure for August was 140 motorboats, then the number of motorboats produced in
February 2003 was closest to
If a chain-based index is used, the price index number for 2000 will be closest to
1.12 A broker has estimated the profits or losses for a particular investment and their respective
probabilities as follows:
Profit(000) -1 1 3 5
Probability 01 03 04 02
A 21 B 22 C 23 D 24
1.13 The Personnel Department of a large manufacturing company wishes to measure the correlation
between the performance of its employees on an aptitude test, and their ability to carry out a specific
work-related task.
The following table shows the rankings of 7 employees at both the test and the task:
Employee A B C D E F G
Test Rank 2 5 7 4 1 6 3
Task Rank 2 6 7 4 3 5 1
1.14 If, in a particular week, the production level is 500 units, then the predicted costs will be
1.16 A graphical presentation of classified data in which the number of items in each class is represented
by the area of the bar is called
A an ogive.
B a histogram.
C a bar chart.
1.17 A pie chart is to be drawn to represent the following data, which shows the breakdown by department
of the number of employees working on a particular project:
Department Number of Employees
Marketing 7
Finance 5
Personnel 8
Sales 10
The angle of the sector (slice), in degrees, of the pie chart representing Finance will be
A 30 B 45 C 60 D 90
1.18 A survey is to be carried out into the spending habits of the population of a large town in the North
East of England. It has been decided that five small areas are to be randomly chosen, two close to the
town centre and three in more outlying areas. In these areas, ten interviewers are each required to
interview a randomly selected sample of 30 people.
1.20 At a second checkout in the same supermarket as in sub-question 1.19, the service time has an
arithmetic mean of 5 minutes and a standard deviation of 1 minute.
A 50% B 20% C 5% D 2%
1.21 The underlying trend in the demand for a particular product is constant (flat), and is subject to
quarterly seasonal variations as follows:
Quarter Q1 Q2 Q3 Q4
Seasonality +50% +50% -50% -50%
If the demand for the last quarter, Q2, was 240 units, then the forecasted demand for the next quarter, Q3, is
1.22 A bank offers investors a nominal annual interest rate of 4% with interest paid quarterly.
1.23 If 10,000 is invested now, at an interest rate of 6% compounded annually, then after 5 years the
value of the investment will be closest to
1.25 An annuity requires the deposit of 100 per year for 5 years. The deposits are made at the beginning
of each year and earn interest at 8% per year. At the end of the 5 years, the investment will be worth
closest to
(Total = 50 Marks)
End of Section A
IMPORTANT
MARKS ARE AWARDED FOR COMPLETING THE SHADED BOXES WITH THE CORRECT
ANSWER WHERE A MARK IS INDICATED IN THE RIGHT-HAND COLUMN.
THERE ARE NO MARKS FOR COMPLETING THE MISSING FIGURES WHERE NO MARK IS
INDICATED, BUT COMPLETING THESE WILL HELP YOU OBTAIN THE CORRECT ANSWERS.
DO NOT WRITE IN THE MARGINS NOR IN THE COLUMNS FOR USE BY MARKERS.
Question Two
As part of its expansion plans, a large financial services organisation is examining the feasibility of updating
and expanding its IT facilities. One proposal is the purchase of a new server costing 7,500. This would
reduce the operating costs over the next five years as shown below:
End of year 1 2 3 4 5
Net cash savings 1,000 2,000 3,000 3,000 2,000
It is anticipated that the cost of capital to the organisation will be 10% per year over this period.
(b) Explain, in the shaded area below, what is meant by the term
internal rate of return (IRR).
Maximum of 20 words 3
(c) Calculate the approximate internal rate of return (IRR) of the above
project, correct to the nearest whole percentage point.
4
(d) On the basis of your calculations, explain, in the shaded area below,
whether or not you would recommend the purchase of the server.
Maximum of 30 words 3
A large manufacturing company, with factories throughout Europe, employs a large force of travelling
salespeople. Records show that for salespeople in the UK, the weekly distance travelled per person is
approximately Normally distributed with a mean of 1,000 kilometres and a standard deviation of
300 kilometres.
The companys Head of Marketing and Sales thinks that salespeople who
travel more than 750 kilometres per week should be eligible for a luxury Do not write in these
company car. columns below
(c) In France, where 200 salespeople are employed, the mean distance
travelled is 1,000 kilometres per week, but there is less variability in
the weekly distances. The standard deviation is estimated as 200
kilometres.
Calculate the number of salespeople in France who travel
(i) less than 1,250 kilometres per week
2
(ii) between 750 kilometres and 1,250 kilometres per week
A newspaper publisher is promoting the sales of a new local daily newspaper. The following table shows the
daily sales of the newspaper over a recent three-week period:
Day Sales
(00s)
Monday 27
Tuesday 41
Wednesday 45
Thursday 53
Friday 65
Monday 30
Tuesday 42
Wednesday 50
Thursday 57
Friday 66
Monday 34
Tuesday 48
Wednesday 53
Thursday 59
Do not write in these
Friday 72 columns below
80
70
60
50
Sales,
00s 40
per day 30
20
10
0
M T W Th F M T W Th F M T W Th F
Day 2
(b) State two features of the time series shown by the graph.
(1)
Maximum of 15 words 1
(2)
Maximum of 15 words 1
(c) The following table shows the stages in the calculation of the 5-day
moving average trend line. State which values would arise at A, B
and C.
* indicates the cell is blank
5-day
Sales
5-day moving Trend
Day (00s)
moving total average (Y T)
(Y)
(T)
Monday 27
Tuesday 41
Wednesday 45 A * * 2
Thursday 53 234 4680 620
Friday 65 235 4700 1800
Monday 30 240 4800 -1800
Tuesday 42 244 4880 -6.80
Wednesday 50 245 4900 100
Thursday 57 249 B 7.20 2
Friday 66 255 5100 1500
Monday 34 258 5160 C 2
Tuesday 48 260 5200 -400
Wednesday 53 266 5320 -020
Thursday 59
Friday 72
sub-total: 8
maximum of 20 words 2
(e) Using the available data in the table in requirement (c) and assuming
an additive model, calculate the seasonal component for Monday,
giving your answer correct to two decimal places.
2
(f) For the Tuesday of next week the trend forecast for the sales is 6,600
newspapers. What is the forecast for the overall sales for that day?
3
sub-total: 7
3c FBSM
17 November 2003
Monday late afternoon
INSTRUCTIONS TO CANDIDATES
Read this page before you look at the questions
You are allowed two hours to answer this question paper. All questions are compulsory.
Answer the ONE question in section A (this has 25 sub-questions and is on pages 2 12)
You are advised to spend 10 minutes reading through the paper before starting to answer the questions.
You should spend no more than 55 minutes on answering the ONE question in section A, which has 25
sub-questions.
You should spend no more than 55 minutes on answering the THREE questions in section B.
Hand this entire booklet to the invigilators at the end of the examination. You are NOT permitted to leave
the examination hall with this booklet.
TURN OVER
Each of the sub-questions numbered from 1.1 to 1.25 inclusive, given below, has only ONE correct
answer.
REQUIRED:
Place a circle "O" around the letter A, B, C or D that gives the correct answer to each sub-question.
If you wish to change your mind about an answer, block out your first answer completely and then circle
another letter. You will NOT receive marks if more than one letter is circled.
Please note that you will NOT receive marks for any workings to these sub-questions. Sufficient space
has been provided for you to do your workings where these sub-questions require them.
Question One
1.1 A large department store wishes to carry out a survey by issuing a questionnaire to a sample of 100 of
its 2,000 account holders. The sample is to be selected as follows:
Each customer will be allocated a number from 1 to 2000. A table of random numbers from 1 to 20 will
then be used to select the first member of the sample. Every succeeding 20th member of the
population of account holders will then be selected.
Yearly Sales
8000
7000
6000
5000 Factory C
$000
4000 Factory B
3000 Factory A
2000
1000
0
2000 2001 2002
A a Histogram.
D an Ogive.
TURN OVER
Which of the following equations best represents the above scatter diagram:
A Y = 2X + 3 B Y = 3X + 2 C Y = 3X - 2 D Y = 2 - 3X
1.5 A customer paid $230 for a television which had been reduced by 15%. The original price of the
television before the price reduction was closest to
1.7 Since 1995, the average annual salaries for a group of workers have been index-linked to prices. The
table below shows the price index since 1997:
(1995 = 100)
Year 1997 1998 1999 2000 2001 2002
Price Index 112 118 122 125 127 130
If the average salaries were $30,000 in 1997, then the average salaries of the workers in 2002 would have
been closest to
A $31,800. B $33,600. C $34,821. D $36,000.
TURN OVER
A relatives quantity index, to the nearest whole number, for the year 2002, with 2001 as the base year, will
be
1.9 The sum, S, of the first n terms of a geometric series with first term a and common ratio r, is given by
the formula:
a(r n 1)
S=
(r 1)
The sum of the first 8 terms of a geometric series with common ratio 3 is 19,680.
The first term of this series is
A 7 B 6 C 5 D 4
1.10 The probability that a randomly selected purchaser is male and aged 50 or under is
1.11 If the selected purchaser is female, the probability that she is aged 25 to 50 is
1.12 The following table shows the number of cars of a particular model sold by a dealer over the last five
weeks:
Week 1 2 3 4 5
Cars sold 8 3 7 9 4
The expected number of cars of this model to be sold in the year (50 weeks) is
TURN OVER
In order to break even, between premiums taken in and claims paid out, the company should set the annual
premium for each policy at
The following data are to be used to answer questions 1.14 to 1.16 below.
Flights arriving at an airport are subject to delays. The length of the delays is normally
distributed with a mean of 20 minutes and a standard deviation of 8 minutes.
1.14 The probability that a flight will be delayed by less than 10 minutes is nearest to
1.15 The probability that a flight will be delayed by between 15 and 25 minutes is nearest to
1.17 Using a 4-point centred moving average, the trend component of the demand (000 units) for Quarter 4
of the year 2000 will be closest to
1.18 If an additive model is assumed, and the seasonal components of the demand for quarters 2,3 and 4
are -88, 30 and 66 respectively, the seasonal component of the demand (000 units) for Quarter 1 will
be
A 80 B -80 C 27 D -27
1.19 A small manufacturing company owns two machines, A and B. Machine A is valued at $15,000 10%,
and machine B is valued at $25,000 5%.
The maximum percentage error in the combined value of the two machines is closest to
A 70% B 75% C 100% D 150%
TURN OVER
The following data are to be used to answer questions 1.21 and 1.22 below.
$20,000 is invested at an interest rate of 4%, which is compounded annually.
1.21 After 10 years, the investment will have a value, to the nearest $, of
1.24 If the annual rate of interest is 475%, the amount (to the nearest $) that should be invested now in
order to receive $5,000 per annum in perpetuity, with receipts starting one year from now, is
TURN OVER
End of Section A
TURN OVER
IMPORTANT
MARKS ARE AWARDED FOR COMPLETING THE SHADED BOXES WITH THE CORRECT
ANSWER WHERE A MARK IS INDICATED IN THE RIGHT-HAND COLUMN.
THERE ARE NO MARKS FOR COMPLETING THE MISSING FIGURES WHERE NO MARK IS
INDICATED, BUT COMPLETING THESE WILL HELP YOU OBTAIN THE CORRECT ANSWERS.
DO NOT WRITE IN THE MARGINS NOR IN THE COLUMNS FOR USE BY MARKERS.
Question Two
Because of an increasing population, the executive committee of a local community centre is planning to
build an extension to its main building. In order to fund this building project, the centre will need to have
$300,000 available at the beginning of January 2005.
To achieve this, the centre intends to make 8 equal quarterly instalments of $X into a sinking fund which
pays a quarterly compound interest rate of 1%. The first of the instalments was paid at the beginning of April
2003.
Note:
The sum of the first n terms of a geometric series with first term A and common ratio R, is:
A(R n 1)
Sn =
(R 1)
The executive committee has estimated that the project will take one year to complete, and will be ready for
use in January 2006. The increased cash flows that will be generated by the centres extended facilities and
fundraising activities during the construction period have been estimated to be $50,000 for each of the first
five years, and then $30,000 for each of the next five years.
Do not write in these
columns below
maximum of 20 words 2
Airport Catering Ltd provides catering services at airports throughout Europe. Each month, the Sales
Manager is required to produce a statistical report that summarises the companys performance.
The table below shows October's sales figures ($000) at 50 of its branches:
Sales
($000) Frequency
Less than 30 3
30 < 60 5
60 < 90 7
90 < 120 9
120 < 150 11
150 < 180 8
180 < 210 5
210 < 240 2
Total 50
maximum of 30 words 2
(d) Use the following axes to draw an ogive for Octobers sales figures:
SALES($000)
3
sub-total: 5
Each year, a large company, which manufactures domestic electrical appliances, pays its employees an
annual bonus. The Company Accountant wishes to assess the effect of the previous years bonus on the
companys output for the following year.
Data relating to bonus paid (as a percentage of annual salary) and total output (tens of thousands of units
sold) over an 8-year period are given in the following table:
30
Output (0,000 units)
25
20
15
10
0
0 1 2 3 4 5 6 7 8
Bonus (%)
2
Comment on the relationship shown by your scatter diagram in the
(b) shaded box below.
maximum of 20 words 2
Sub-total: 4
TURN OVER
maximum of 20 words 3
Sub-total: 7
maximum of 20 words 2
(g) Another similar manufacturing company has found that the coefficient
of determination between Bonus and Output is 086. Explain what this
means.
maximum of 20 words 2
FBSM
Business Mathematics