In relation to the use of the adjusted present value (APV) technique, which of the following statements are correct?

• A.The interest tax shield on the project's debt must be known, or at least estimated.
• B.The weighted average cost of capital - net present value technique and the APV technique will, if applied correctly, give the same answer.
• C.To apply APV the actual amounts of debt and equity in the capital structure must be known.
• D.To apply APV, the proportions of debt and equity in the capital structure must be known.

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Select the most appropriate level of responsibility for managing each of the following risks.

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B uses a balanced scorecard to monitor the performance of its divisions.
Classify each of the following decisions taken by a division's management team as either commercially sound or dysfunctional.

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G plc has decided to move its production plant to overseas Country A.
This would make the product cheaper to produce. The technology used to make the product is very advanced and some of the staff would have to move to Country A.
The Production Director has identified that there are some political risks in moving to Country A.
Match the methods of reducing the political risks associated with the move to Country A with the corresponding risks.

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D plc is a public relations company. Shares in D plc have recently been listed on the UK stock exchange.
D plc has an internal audit department that reports to the Chief Executive Officer (CEO). The CEO is considering outsourcing internal audit to an audit firm, which would not be the firm that conducts D plc's external audit.
Identify THREE advantages to D plc of outsourcing internal audit in this way.

• A.Decisions relating to internal audit can be based solely on cost.
• B.Doing so may improve independence.
• C.Internal audit will have a better understanding of D plc's objectives and culture.
• D.Specialist skills may be more readily available.
• E.Risk of staff turnover is passed to the outsource company.

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