1.

Trace the right sequence of the project life cycle according to World Bank:

A. Project identification, feasibility studies, project appraisal, project implementation,

project evaluation.
B. Project identification, project appraisal, project preparation, project implementation,
project evaluation
C. Project preparation, project identification, project appraisal, project implementation,
project evaluation
D. Preliminary screening, pre-feasibility study, project appraisal, project preparation, project
implementation, project evaluation.

2. Which of the following phase of the project cycle according to UNIDO involves a detail
review of available alternatives?
A. Opportunity study
B. Pre feasibility study
C. Feasibility study
D. Appraisal study
E. None

3. Pick the correct sequence of market and demand analysis:

A. Collection of secondary information, situational analysis, market survey,
characterization of market demand forecasting
B. Situational analysis, collection of secondary information, market survey,
characterization of the market, demand forecasting
C. Situational analysis, market survey, collection of secondary information,
characterization of the market, demand forecasting
D. Situational analysis, characterization of the market, collection of secondary
information, market survey, demand forecasting

4 One of the following is not the characteristics of the market:

A. Demand breakdown
B. Government policy
C. Consumers
D. Distribution and promotion
E. None

4 Among the following organizational functions, one is responsible for the creation of goods
and services to customers via the marketing department.
A. Marketing
B. Sales and distribution
C. Production
D. Purchasing
E. None

4 One of the following is false regarding significance of planning

1
 A. It is a means of communication and coordination
B. It induces people to look a head
C. It provides a basis for organizing the work of the project
D. It establishes the basis for monitoring and control
E. None

4 Some two years back, a task force of Admas University College with the aim of revising the
finance system was established. After it has performed the intended tasks, the work team
later disbanded. The feature of a project that best describes this is
A. Uniqueness
B. Time boundedness
C. Specific objective
D. Temporal spread

4 Trace the false statement concerning bond

A. It is an instrument for raising long term loan
B. The bond holders are the creditors of the company
C. Interest on bond is to be paid irrespective of the financial situation of the issuing firm
D. The cost of bond is generally more than the cost of equity capital
4 Selection of project location may not be affected by
A. Availability of market for input and output
B. Availability of infrastructure
C. Social and cultural conditions
D. Government policy
E. All affect selection of location
4 Technical analysis is not mainly concerned with
A. Ensuring sustainable supply for raw – materials
B. Determining optimal plant capacity
C. Determining purchasing power of consumers
D. Selecting suitable plant location
E. None
4 One of the following components of feasibility study covers about the demand and supply
aspects of the proposed goods or services of the project:
A. Commercial analysis
B. Environmental analysis
C. Technical analysis
D. Economic analysis
E. Functional analysis

2
4 Selection of technology is not directly affected by one of the following factor:
A. Plant capacity
B. Ease absorption
C. Environmental impact
D. Price of the proposed product or service
E. None

27. Working capital includes:

A. Raw – materials
B. Accounts receivable
C. Finished goods
D. Accounts payable
E. All of the above

28. An internal rate of return (IRR) of a project:

A. Net present value of the project will be zero and the profitability index will be one
B. Net present value of the project will be positive and the profitability index will be
more than one
C. Net present value of the project will be negative and the profitability index will be
less than one.
D. Net present value of the project will be zero and profitability index will be less than
one
E. None

29. Suppose that Coca – Cola company wants to establish a soft drink bottling plant. You
are the newly hired project analyst and the company seek your advice where exactly the plant
will be erected

A. Nearer to raw – material

B. Nearer to market D. All of the above
C. Near to port E. None

1. Assume that Admas University College wants to add the international trade and
investment management department to faculty of Business, Admas University College
has made details need assessment survey. This aspect of feasibility study is done in the:

3
 A. Financial analysis
B. Market and demand analysis
C. Technical analysis
D. Economic analysis
2. Identify the project- financing source that is different from the rests

A. Debentures
B. Banks
C. Owners capital
D. Bonds
E. None

3. Which of the following are not pre – production expenditure?

A. Training costs during the operations stage of the project
B. Expenditures for opportunity, support, pre – feasibility and feasibility studies.
C. Salaries and benefits for project implementation team members
D. Preparatory implementation costs like workers camp and temporary houses and stores
E. None of the above
4. Which of the following may come first in a feasibility study?

A. Adequacy of market for out put D. Financial analysis

B. Availability of technology E. Reasonable investment cost
C. Availability of basic raw –
materials
 PART III: Mini Case (4 Marks)

Assume that Admas University College is planning to launch post graduate programs
in master of business administration and finance. The university college have applied
for accreditation to the ministry of education and got a permission to commence the
programs. The University College is going to start master programs on January 1,
2010.

Required:
a. Is faculty of business capable of launching such programs with the current
resources? Reason out your argument.
b. Comment on the strengths and weaknesses of the faculty and opportunities
and challenges with regard to the programs.

Part IV. Work out problem ( 6 marks)

You are a project analyst for Adey Abeba Company, the director of the proposed project
company has asked you to analyze two proposed investments, project X and project Y
each project has the cost of Br 10,000 and the cost of capital for each project is 12
percent. The expected net cash flows of the project are as follows:
Expected cash flows
Year Project X Project Y
0 (10,000) (10,000)
1 6,500 3,500
2 3,000 3,500
3 3,000 3,500
4 1000 3,500

Required
a. Calculate each project payback, net present valve, internal rate of return.
b. Which project should be accepted if they are independent projects?
c. Which project should be accepted if they are mutually exclusive?