FIM3701
ASSIGNMENT 1 SEMESTER 1 2025
UNIQUE NO.
DUE DATE: 2025
, FIM3701 Assignment 1
Question 1: Select only the statement that is true
✅ B. A valid method for factoring risk into the capital budgeting process is by applying a
risk-adjusted discount rate. This approach increases the discount rate for projects
with higher risk, thereby reducing their present value and making riskier projects less
attractive unless they offer higher expected returns.
Question 2: Select only the statement that is true
✅ A. The approval or continuation of projects can be delayed or entirely halted due
to the macroeconomic conditions or financial constraints facing a country. Issues
such as budget deficits, currency instability, or recession can lead governments or
institutions to scale down or suspend project funding.
✅ B. In engineering design, two of the main economic goals are economic feasibility,
which assesses whether the benefits justify the costs, and efficiency, which ensures
optimal use of resources to deliver maximum output or utility.
Question 3: Select only the statement that is true
✅ A. By using the real interest rate, the influence of inflation is excluded from
calculations, allowing for more accurate comparisons of value over time by reflecting the
true purchasing power of money.
✅ C. If R1,000 is available today in the year 2021 and the annual inflation rate is 5%,
then after two years (by 2023), it will only be able to purchase what R950 could buy in
2021. This illustrates the erosion of purchasing power over time due to inflation.
Question 4: Select only the statement that is true
✅ A. When problems or systems are highly complex, models are commonly used to
ASSIGNMENT 1 SEMESTER 1 2025
UNIQUE NO.
DUE DATE: 2025
, FIM3701 Assignment 1
Question 1: Select only the statement that is true
✅ B. A valid method for factoring risk into the capital budgeting process is by applying a
risk-adjusted discount rate. This approach increases the discount rate for projects
with higher risk, thereby reducing their present value and making riskier projects less
attractive unless they offer higher expected returns.
Question 2: Select only the statement that is true
✅ A. The approval or continuation of projects can be delayed or entirely halted due
to the macroeconomic conditions or financial constraints facing a country. Issues
such as budget deficits, currency instability, or recession can lead governments or
institutions to scale down or suspend project funding.
✅ B. In engineering design, two of the main economic goals are economic feasibility,
which assesses whether the benefits justify the costs, and efficiency, which ensures
optimal use of resources to deliver maximum output or utility.
Question 3: Select only the statement that is true
✅ A. By using the real interest rate, the influence of inflation is excluded from
calculations, allowing for more accurate comparisons of value over time by reflecting the
true purchasing power of money.
✅ C. If R1,000 is available today in the year 2021 and the annual inflation rate is 5%,
then after two years (by 2023), it will only be able to purchase what R950 could buy in
2021. This illustrates the erosion of purchasing power over time due to inflation.
Question 4: Select only the statement that is true
✅ A. When problems or systems are highly complex, models are commonly used to
