Edexcel A-Level Business 2027 Predicted Practice Paper — Paper 1

Answer ALL questions. Write your answers in the spaces provided. You must write down all the stages in your working.

Section A

Data response question on Themes 1 and 4. Answer all questions in Sections A and B.

• 1

  Question SECTION-A1 (12 marks)

  Extract A: BrightLeaf Kombucha Ltd is a small UK drinks producer founded in 2022. In 2026 it sold 480,000 bottles at an average selling price of GBP 2.50 each. Its variable cost per bottle is GBP 1.60 and its total fixed costs for the year were GBP 320,000. (a) Calculate BrightLeaf's contribution per bottle. (2 marks) (b) Using your answer to (a), calculate the number of bottles BrightLeaf must sell to break even. (2 marks) (c) Calculate BrightLeaf's total profit for 2026. (4 marks) (d) Using your answers above, calculate BrightLeaf's margin of safety in 2026, both in bottles and as a percentage of actual sales. (4 marks) Show all working. Present money as GBP.

  (Total for Question SECTION-A1 is 12 marks)
• 2

  Question SECTION-A2 (12 marks)

  Extract B: BrightLeaf Kombucha Ltd is considering borrowing GBP 250,000 to install a second bottling line. The founder is worried the business is becoming too reliant on debt: its gearing ratio is already 55%. A rival investor has instead offered GBP 250,000 of share capital in exchange for a 20% equity stake. Assess whether BrightLeaf should raise the GBP 250,000 through a bank loan rather than by selling equity to the investor. (12 marks)

  (Total for Question SECTION-A2 is 12 marks)
• 3

  Question SECTION-A3 (14 marks)

  Extract C: BrightLeaf now exports to three EU countries. In early 2027 the pound strengthened from GBP 1 = EUR 1.15 to GBP 1 = EUR 1.25. BrightLeaf prices its exports in euros and had been charging EUR 2.88 per bottle. It imports glass bottles from an EU supplier, invoiced in euros. (a) Explain one likely effect of this exchange-rate movement on the price competitiveness of BrightLeaf's exports in the EU. (4 marks) (b) Assess the overall impact of this stronger pound on BrightLeaf's profitability, given that it both exports finished drinks and imports glass bottles from the eurozone. (10 marks)

  (Total for Question SECTION-A3 is 14 marks)
• 4

  Question SECTION-A4 (12 marks)

  Extract D: BrightLeaf's founder is deciding whether to pursue rapid growth by signing a supply deal with a large national supermarket, or to keep the business small and focused on independent health-food shops. The supermarket deal would roughly triple output but demands a 30% wholesale discount and 60-day payment terms. Evaluate whether BrightLeaf should accept the supermarket supply deal. (12 marks)

  (Total for Question SECTION-A4 is 12 marks)

Section B

Data response question on Themes 1 and 4. Answer all questions in Sections A and B.

• 1

  Question SECTION-B1 (12 marks)

  Extract E: NovaWheel plc is a UK-headquartered multinational that manufactures electric bicycles and sells them in 18 countries. In 2026 it opened a new assembly plant in Vietnam to serve its growing South-East Asian market. The plant employs 900 local workers. Extract F: A campaign group has accused NovaWheel of paying below-average local wages and of moving production abroad mainly to avoid stricter UK environmental rules. NovaWheel says the plant has raised local employment and skills, and that all wages meet or exceed the legal minimum. Assess the likely impact of NovaWheel's decision to locate production in Vietnam on stakeholders in both the host country (Vietnam) and NovaWheel's UK home base. (12 marks)

  (Total for Question SECTION-B1 is 12 marks)
• 2

  Question SECTION-B2 (12 marks)

  Extract G: NovaWheel plc is appraising an investment of GBP 4,000,000 in a robotic paint line at its UK factory. The project is forecast to generate the following net cash flows: Year 1: GBP 1,200,000 Year 2: GBP 1,600,000 Year 3: GBP 1,800,000 Year 4: GBP 1,400,000 (These net cash flows are stated after deducting operating costs but before the initial GBP 4,000,000 outlay.) (a) Calculate the payback period for the robotic paint line. Give your answer in years and months. (4 marks) (b) Calculate the Average Rate of Return (ARR) for the project. Show your working and give your answer as a percentage. (4 marks) (c) Explain one limitation of using ARR to appraise this investment. (4 marks)

  (Total for Question SECTION-B2 is 12 marks)
• 3

  Question SECTION-B3 (14 marks)

  Extract H: NovaWheel plc wants to expand sales into a large emerging market. Its marketing director argues for a global (standardised) marketing strategy using the same product design and advertising worldwide to cut costs. The regional manager argues for a 'glocal' approach, adapting the e-bikes' battery range, pricing and promotion to local conditions such as terrain, income levels and language. Extract I: The chosen emerging market has fast-growing incomes but poor road infrastructure, low brand awareness of NovaWheel, and strong local competitors. (a) Explain one benefit to NovaWheel of using a standardised (global) marketing strategy. (4 marks) (b) Evaluate whether NovaWheel should use a glocal (adapted) marketing strategy rather than a fully standardised one when entering this emerging market. (10 marks)

  (Total for Question SECTION-B3 is 14 marks)
• 4

  Question SECTION-B4 (12 marks)

  Extract J: NovaWheel plc faces a proposal from the government of one of its export markets to impose a 15% import tariff on electric bicycles to protect its domestic manufacturers. NovaWheel could respond by (i) absorbing the tariff to keep prices unchanged, (ii) passing it on to consumers, or (iii) building a local factory inside that market to avoid the tariff. Evaluate which of these three responses would be the most appropriate for NovaWheel. (12 marks)

  (Total for Question SECTION-B4 is 12 marks)