FIM3701 Assignment 1 Semester 1 2025

FIM3701
ASSIGNMENT 1 SEMESTER 1 2025

UNIQUE NO.
DUE DATE: 2025

, FIM3701 Assignment 1 – True Statements with Short Explanations

1. Select only the statement that is true:
✅ B. Using a risk-adjusted discount rate is one way to include risk when evaluating
capital projects.

This approach adjusts the discount rate based on the project's risk level, ensuring more
accurate investment decisions.

2. Select only the statement that is true:
✅ A. Project approvals may be postponed or cancelled due to a country’s economic or
financial instability.

Economic uncertainty can reduce funding availability or make investments too risky.


✅ B. Economic feasibility and efficiency are key goals in the engineering design
process.

These goals ensure that designs are both cost-effective and make the best use of
resources.

3. Select only the statement that is true:
✅ A. The real interest rate excludes the impact of inflation, showing the true cost of
borrowing or return on investment.

It reflects purchasing power rather than nominal value.


✅ C. If inflation is constant at 5%, R1000 in 2021 would only buy what R950 could
today by 2023.

This shows how inflation reduces the value of money over time.