Q.No.

1 The firm can invest Rs 10000 in a project with a life of three years The projected cash inflow are as follows:Year Rs 1 4000 2 5000 3 4000 The cost of Capital is 10% per annum. Should the investment be made ? Q.No-2 Machine A cost Rs. 100 000 payable immediately. Machine B Cost Rs 140000 half payble immediately half in one year time. The cash receipts expected are as follows:Year (at the end) A B 1 20000 2 60000 60000 3 40000 70000 4 35000 85000 5 20000 With 10% interest on Capital give your opinion which machine should be opted? Q.No-3 Orient Enterprises limited have under consideration two project A and B. For the Present, it wants to take up only of the two projects and not both . The details relating to the two projects are given below. ` Project A Project Investment Required 95 200 st Estimated cash flow (PAT+Dep)at the end of 1 year 40 80 Estimated cash flow (PAT+Dep) at the end of 2nd year 40 80 Estimated cash flow (PAT+Dep) at the end of 3rd year 45 120 The cost of Capital of the company is 12% using NPV method which project you recommended? Q.No-4 ZEE and CHEE are two Machine produced the same article. Year ZEE CHEE PV Factor @ 15%

1 2
3. 4 5 Salvage value at the end of year 5

100 000 1,50,000

1,80,000 2,00,000 170,000 50,000

200 000
2,10,000 1,80,000 1,70,000 40,000 60,000

.87
.76 .66 .57 .50

Q NO-5 The Alpha company is considereing the purchase of a new machine. Two Alternative machine (A and B) have been suggested, each costing Rs 400 000 Earning After Taxation but before depreciation are expected to be as follows:Year Machine A Machine B 1. 40,000 1,20,000 2. 1,20,000 1,60,000 3. 1,60,000 2,00,000 4. 2,40,000 1,20,000 5. 1,60,000 8,0000 The company has target rate return on capital @ 10% and on the basis you are required:(a) Compute profitability of the machines and state which alternative you consider financially preference (b) Compute the payback period for each project and (c) Compute internal rate of retrun. Q.No-6 An Investment of Rs 1,36,000 yields the following cash inflow (profits before depreciation but after tax) determine the internal rate of return. Year Rs 1. 30,000 2. 40,000 3. 60,000 4. 30,000 5. 20,000 Determine the payback period Q.No-7 Project Required intial investment NPV A 1,00,000 20,000 B 3,00,000 35,000 C 50,000 16000 D 2,00,000 25,000 E 1,00,000 30,000 Total funds available is Rs 3,00,000. Determine the optimal combination of projects assuming that the project are (1) Divisible (2) Indivisible

Q.No-8 Alpha limited is considering five capital projects for the years 2000-2001,2002 and 2003. The company is financed by equity entirely and its cost of capital is 12%. The expected cash flows of the projects are as follows: Project A B C D E 2000 (70) (40) (50) (60) 2001 35 (30) (60) (90) 20 2002 35 45 70 55 40 2003 20 55 80 65 50

All projects are divisible size of investment can be reduced. If necessary in relation to availability of funds. None of the projects can be delayed or undertaken more than once Calculate which project alpha limited should undertake if the capital available for investment is limited to Rs 1,10,000 in year 2000 and with no limitation in subsequent years. For your analysis use the following present value factors. Year 2000 2001 2002 2003 Discounting 1.00 .89 .80 .71 factor Q.No-9 In a capital rationing(investment limit Rs 35 Lakh) suggest the most desirable feasible combination on the basis of the following data Initial NPV Outlay (Rs. In lakh) A 15 6 B 10 4.5 C 7.5 3.6 D 10 5 Project B and C are mutually exclusive. If project are divisible Or If project are indivisible Q.No10 What is Financial Management , Define Nature and its objective? Q.No-11 What is Time Value of Money ? Why a person prefer to expenditure in present Than any future period?