These are explanations and solutions for IB past papers, not the official version. For official papers, you can go to IB Follet or access them through your school.
These are explanations and solutions for IB past papers, not the official version. For official papers, you can go to IB Follet or access them through your school.
These are explanations and solutions for IB past papers, not the official version. For official papers, you can go to IB Follet or access them through your school.
These are explanations and solutions for IB past papers, not the official version. For official papers, you can go to IB Follet or access them through your school.
02 Hours 15 Minutes
75 Marks
Calculator is allowed
IB BUSINESS MANAGEMENT HL, Paper 2, November, 2012, TZ0, Solved Past Paper
Master the 2012 IB November for Paper 2 Business Management HL with examiner tailored solutions and comments for TZ0
Question 1 [Explained]
Easy E Booking (EEB) is a reputable and financially stable online hotel reservation service. Due to increasing global demand, competition, and technological changes, EEB's finance director, Maia, is considering upgrading the company's computers and/or software. Maia has two options: Option A involves purchasing new software called "Book-Fast" from a local designer, while Option B involves purchasing new computers with pre-installed software called "Global Reach" from an international manufacturer. Each option has distinct costs, benefits, and implications for the company, which need to be evaluated using various financial metrics and methods.
Question 1 [a] [Explanation]
This question requires you to describe one strength and one weakness of using the straight line method of depreciation for EEB. The straight line method is a common depreciation method where the asset's cost is evenly spread over its useful life. This method is straightforward and easy to apply but may not accurately reflect the actual depreciation of certain assets, especially those that lose value more rapidly in the early years.
Question 1 [b] [Explanation]
This question asks you to calculate the payback period for Option A. The payback period is the time it takes for an investment to generate an amount of income or cash equivalent to the cost of the investment. It is a simple and widely used method for evaluating investment opportunities.
Question 1 [c] [Explanation]
This question requires you to calculate the average rate of return (ARR) for Option B. The ARR is a financial metric used to assess the profitability of an investment, calculated by dividing the average annual profit by the initial investment cost and expressing the result as a percentage.
Question 1 [d] [Explanation]
This question requires you to calculate the net present value (NPV) for both Option A and Option B using a discount rate of 4%. NPV is a financial metric used to assess the profitability of an investment, calculated by discounting future cash flows to their present value and subtracting the initial investment cost.
Question 1 [e] [Explanation]
This question requires you to explain one advantage and one disadvantage of using the NPV method of investment appraisal for EEB. NPV is a widely used financial metric that considers the time value of money, providing a more accurate assessment of an investment's profitability.