Financial Management and Corporate Finance
Numerical of UNIT 1
Q .1) What alternative would be selected by the director on the basis Of forwarded information by
Payback period method?
Given Data:
Particulars Machine A Machine B
ost of Machine
Net Profit uo,ooo
Depreciation t20,ooo 220,000
Serap Value uo,ooo uo,ooo
Q 2) The following particulars relate to two projects:
Particulars Project I Project [I
Cost (in O 90,000
nomic Lire (in Years) IO 8
Compute time Adjusted Rate of Return and state which of the two projects is better.
Q.3) Rank these proposals according to your opinion:
Proposals Initially outlay (R) nnual cash inflow (O
7,000
36,000
, Q.4) X Ltd. has purchased patent rights for which to run for a period Of three year'S. The future
earnings after tax (EAT) are given below:
20,000
20,000
20.000
Compute the following:
(a) Pay-back period
(b) Average rate of return (ARR)
(c) Internal rate of return (IRR)
(d) Net Present Value (NPV) at 15% discount. PN. of Re. I for 3 years at 15% is 2.283.
Q.S) A project costs and yields annually a profit Of 280,000 after depreciation @ 12% p.a. but before
tax Of 50%. Calculate the pay•back period.
Q.6) Cost of project is 280,000 and estimated working life is 5 years. It is estimated to have annual
cashinflow and scrap value Z5,000. Calculate average rate Of return Of the project.
Q.7) A project costing has life Of 10 years at the end of Which its Scrap value is likely to be
The firm's cut-off rate is 12%.
The project is expected to yield an annual profit after tax depreciation being charged on straight
line basis At 12% per annum:
Present value of one rupee received annually for 10 years — 25.650
Present value of one rupee received at the end of the 10th year — 0322
Ascertain the Net Present Value (NPV) Of the project and State whether We should go in the project.
Q .8) Rank these investment proposals according to your opinion:
Annual cash Flow
6,000
2,700
3,600
21,000 6,000
Numerical of UNIT 1
Q .1) What alternative would be selected by the director on the basis Of forwarded information by
Payback period method?
Given Data:
Particulars Machine A Machine B
ost of Machine
Net Profit uo,ooo
Depreciation t20,ooo 220,000
Serap Value uo,ooo uo,ooo
Q 2) The following particulars relate to two projects:
Particulars Project I Project [I
Cost (in O 90,000
nomic Lire (in Years) IO 8
Compute time Adjusted Rate of Return and state which of the two projects is better.
Q.3) Rank these proposals according to your opinion:
Proposals Initially outlay (R) nnual cash inflow (O
7,000
36,000
, Q.4) X Ltd. has purchased patent rights for which to run for a period Of three year'S. The future
earnings after tax (EAT) are given below:
20,000
20,000
20.000
Compute the following:
(a) Pay-back period
(b) Average rate of return (ARR)
(c) Internal rate of return (IRR)
(d) Net Present Value (NPV) at 15% discount. PN. of Re. I for 3 years at 15% is 2.283.
Q.S) A project costs and yields annually a profit Of 280,000 after depreciation @ 12% p.a. but before
tax Of 50%. Calculate the pay•back period.
Q.6) Cost of project is 280,000 and estimated working life is 5 years. It is estimated to have annual
cashinflow and scrap value Z5,000. Calculate average rate Of return Of the project.
Q.7) A project costing has life Of 10 years at the end of Which its Scrap value is likely to be
The firm's cut-off rate is 12%.
The project is expected to yield an annual profit after tax depreciation being charged on straight
line basis At 12% per annum:
Present value of one rupee received annually for 10 years — 25.650
Present value of one rupee received at the end of the 10th year — 0322
Ascertain the Net Present Value (NPV) Of the project and State whether We should go in the project.
Q .8) Rank these investment proposals according to your opinion:
Annual cash Flow
6,000
2,700
3,600
21,000 6,000
