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Project Appraisal Question Paper

Project Appraisal

Course:Bachelor Of Arts (Economics & Sociology)

Institution: Kenyatta University question papers

Exam Year:2008

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2007/2008
SPECIAL/SUPPLEMENTARY EXAMINATION FOR THE DEGREE OF BACHELOR
OF ARTS
AEC 402: PROJECT APPRAISAL
DATE: Tuesday 7th October, 2008

TIME: 8.00 a.m. – 10.00 a.m.

INSTRUCTIONS: Answer question one and any other two questions.

1.
(a)
Define the term Social cost-benefit analysis.

(4 marks)
(b)
Explain how the costs and benefits of a project to society may differ
from the costs and benefits to the private entrepreneur.

(10 marks)
(c)
Give reasons why the future net benefits of a project are discounted.

(4 marks)
(d)
Assume that world prices are in dollars ($) and domestic prices in
rupees (R), that the shadow exchange rate is 2.25 rupees per $, and
that the standard conversion factor for converting non-traded goods
1
prices into world prices is
. Assume further that:
.
2 25
1.
All output is exported with an annual values of $6,000.
2.
The cost of the investment has a foreign component of $2000
and a local (non-traded) component of 2000 rupees.
3.
There are traded inputs of $4000 and non-traded inputs of 2000
rupees.
4.
The accounting rate of interest is equal to the consumption rate
of interest.
5.
Assume a discount rate of 10%.
Required: Using UNIDO and Little-Mirrlees appraise the above project.

(12 marks)

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2

2.
Discuss in details the uses of cost-benefit analysis in:
(a)
Developed countries

(10 marks)
(b) Developing countries

(10 marks)

3.
Write explanatory notes on the following:

(a)
Technical aspect of project

(5 marks)

(b)
Human and managerial aspect of project

(5 marks)

(c)
Economic aspect of project

(5 marks)

(d)
Profitability of a project

(5 marks)

4.
(a)
State and explain the basic data required in any social
cost-benefit analysis.

(10 marks)

(b)
Explain the process of project evaluation.

(10 marks)

5.
Externalities are some of the negative effect that prevent the economy
to realize the full benefit of project. With specific examples explain
the issue of externalities in project evaluation.

(20 marks)

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Project Appraisal Question Paper

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