Question 1

What is NCEA AS 91870 about?

Accepted Answer

You're looking at a big, real financial decision a farm or agribusiness needs to make—like buying new equipment or land that costs a lot of money and will affect the business for years to come. Your job is to work out the different ways the business could pay for it (borrowing money, using savings, finding investors, etc.) and explain how each option would affect the business's finances and operations. You need to pick which option is best and back up your choice with numbers and practical thinking.

Question 2

What do students need to do for AS 91870?

Accepted Answer

1. Choose a realistic strategic capital expenditure decision for a business (something expensive with medium-to-long-term impact, like a new building, machinery, or major expansion) 2. Identify at least 2–3 different financing options the business could use (like loans, equity investment, retaining profits, leasing) 3. Calculate and compare the financial consequences of each option using tools like cash flow, profit impact, debt ratios, or repayment schedules 4. Analyse both the numbers (financial) and the practical effects (non-financial)—like risk, flexibility, control of the business, management complexity, timing 5. Make a clear recommendation for which financing option is best, and justify it by weighing up the trade-offs for that specific business

Question 3

What's the difference between Achieved, Merit, and Excellence for AS 91870?

Accepted Answer

Achieved: You analyse how different financing options affect the business by explaining the financial impact (repayments, interest, profit) and at least one other consequence, then suggest which option is better. Merit: You analyse in depth by working through the financial and non-financial consequences of each option systematically, using calculations and evidence, then select and justify the best option for that business's specific situation. Excellence: You comprehensively analyse by evaluating the consequences of each option using both financial data and practical factors, justify your choice of the best option, and explain how that option would actually affect the business going forward.

Question 4

What mistakes do students typically make in AS 91870?

Accepted Answer

1. Only looking at the numbers (loan interest, repayment amounts) without considering practical business impacts like cash flow stress, loss of control through equity partners, or flexibility to change plans 2. Not actually calculating or comparing the financial effects—just describing what each option is without showing the real cost or profit impact 3. Picking a financing option without clear justification or without explaining why it's better for that business than the alternatives

Financing capital expenditure · AS 91870

771 students sat this in 2024 · 86% passed

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