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Felm4026 Financial And Economic Literacy Assessment Answers

Using the business economics concepts taught in the module, discuss the following statements:
 
a. The Apple mission statement: "Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced iPad 2 which is defining the future of mobile media and computing devices."

b. The AA May 2017 fuel price report: "Unleaded prices have fallen 2.4p from 118.7 p/litre to 116.3 p/litre. Diesel prices have fallen 3.1p from 120.5 p/litre to 117.4 p/litre. The price difference between diesel and unleaded has fallen to 1.1 p/litre." 

c. "All parts of the economy are growing - but the government still has a huge amount to do by continuing to create jobs and supporting businesses to grow".

2. Managers are required to make decisions about a firm's finances. Discuss using the accounting and finance concepts taught in the module. 
 
3.
a. Choose one financial statement from the list on GSM Learn, and calculate five (5) financial ratios, one each from the following
categories– liquidity ratio, market value ratio, asset management ratio, debt management ratio and profitability ratio for the year 2014. Then analyze these ratios either by comparing it to the industry average, or a similar company or earlier years for the same company to determine the health of the company by deciding if each ratio is either, good or poor.

b. Suppose Gary decides to deposit $700 each year for three years in a savings account that pays 8% interest per year. If Gary makes the first deposit one year from today, how much will be in the account immediately after he makes the final deposit in year 3 
 
c. Two projects being considered are mutually exclusive and have the following projected cash flows:

Year Project A   Project B
         £50,000   −£50,000
        17,000           0
        17,000           0
        17,000           0
        17,000           0
        17,000       99,500
 
If the required rate of return on these projects is 10.25 percent, which would be chosen
and why? Show your calculations/explanations. 

Answer:

1 Part a

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