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Project Appraisal Question Paper

Project Appraisal

Course:Bachelor Of Education

Institution: Kenyatta University question papers

Exam Year:2010

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2009/2010
SECOND SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR OF ARTS
AEC 402: PROJECT APPRAISAL
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DATE: Wednesday 7th April, 2010 TIME: 2.00 p.m –4.00 p.m.
INSTRUCTIONS: Answer Question ONE and any TWO Questions

1a) Distinguish between the following terms. [ 12 marks]
i) Private discount rate and social discount rate
ii) Net present value and benefit cost ratio
iii) Financial appraisal and economic appraisal
iv) Real benefits and pecuniary benefits
v) Certainty equivalent and option value

b) Explain four reasons for shadow pricing in project appraisal. [4 marks]

c) Outline four limitations in the use of private discount rate in discounting project cash flows. [ 4 marks]

2 a) Describe three non time adjusted criteria for appraising investment options.
[6 marks]

b) What is sensitivity analysis and what are its uses in project evaluation. [6 marks]

3. a) Explain the conditions that make Cost Benefit analysis desirable in developing countries. [4 marks]

b) What are the major differences between the UNIDO and the Little – Mirrlees approaches to SCBA. [ 6 marks]

4. a) A firm is considering the purchase of a machine. The manufacturers say that the operation cost is likely to be Ksh. 10000 at the worst or Ksh. 5000 at best and has given their own best estimate at Ksh. 6000. Calculate mean and standard
deviation using 3 point statistics and beta distribution. [9 marks]

b) Explain four problems associated with Internal Rate of Return as a tool for appraising investment projects. [ 8 marks]

c) Describe the three important project parameters. [3 marks]

5. A very high prevalence of crime has been reported in your location over the last one year. The location security and peace committee is considering a project to address this problem. You are to guide the process of project identification and selection.
a) Discuss the process you would undertake with the committee to ensure selection of an effective project. [ 10 marks]

b) Suppose on the launch of the project a manager whose work is to oversee the implementation of the project to its completion is appointed. The project will last 4 years. Describe the relevant activities the manager will lead the committee into ensure the project’s success. [ 10 marks]

Project Appraisal Question Paper

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