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Corporate Finance

1. Aradhana Limited has the following 2 investment options:

i) The project requires 1 machine of Rs. 2 lacs with a life of 6 years. There is NIL salvage value expected at the end of the life. The annual income in each year is Rs. 100000, Rs. 200000, Rs. 250000, Rs. 250000, Rs. 200000, Rs. 120000.

ii) Cost of the project is Rs. 1.5 lacs with a life of 5 years. Salvage value of the machinery used in the project is Rs. 10000. The annual income in each year is Rs. 80000, Rs. 80000, Rs. 100000, Rs. 250000, Rs. 100000.
Which option seems more profitable and why? (10 Marks)

2. With the following information, evaluate the projects using payback, discounted payback and the PI method for the following projects. Discounting factor is 10%

Which project shall be chosen?

Under what situation would you prefer the PI method over the other 2 methods? (10 Marks)
Year A B
0 -4,50,000 -550000
1 1,00,000 135000
2 2,20,000 180000
3 2,45,000 235000
4 1,80,000 200000
5 1,20,000 100000


3. a. Juhi has taken a car loan of Rs. 5, 00,000 for a period of 5 year @ 10%. Calculate the EMIs to be paid by her and draw up her EMI Schedule. (5 Marks)

b. XYZ Ltd. manufactures plastic toys. The fixed operating cost is Rs. 1,00,000/-. The toys sell at a price of Rs. 60 each. The variable cost for production of the toys is Rs. 30 each. It has an outstanding loan of Rs. 5,00,000/- @ 8% p.a.

Calculate the DTL at 6000 units of production. Also mention the inference/implication drawn. (5 Marks)

Sep 2023 Plagiarized Assignments Contact
[email protected]
+91 9902787224