FM12
Financial Management
(For CNM Cases)
Assignment – I
Assignment Code: 2016FM12A1 Last Date of Submission: 30th April 2016
Maximum Marks: 100
Attempt all the questions. All the questions are compulsory and carry equal marks.
Section-A
1. Explain the concept of time value of money. How do we calculate the future value and present value of money in case of an annuity? How does the value of money change with change in rate of interest and time duration? Explain with examples.
2. Explain five different kinds of capital Budgeting Appraisal methods used.
3. In relation with the financial markets what are the different kinds of investment risks? How do you measure them?
4. What are the different costs considered in the cost of capital? What approaches are used to calculate the cost of equity?
Section-B
Case Study
A company is considering the following investment projects. All projects require an investment of Rs. 10,000 :
Projects Cash Flow
Year 1 Year 2 Year 3
A 10000 - -
B 7500 7500 -
C 2000 4000 12000
D 10000 3000 3000
Case Questions:
1. Rank the project according to the following :
(i) Payback period
(ii) Average rate of return
(iii) Internal rate of Return
(iv) Net Present Value; assuming discount rates of 10 % and 30%.
2. Assuming that the projects are independent which one would you accept?
3. In case of a conflict in ranking according to the NPV and IRR rule which project you select and why? Explain with example.
Financial Management
(For CNM Cases)
Assignment – I
Assignment Code: 2016FM12A1 Last Date of Submission: 30th April 2016
Maximum Marks: 100
Attempt all the questions. All the questions are compulsory and carry equal marks.
Section-A
1. Explain the concept of time value of money. How do we calculate the future value and present value of money in case of an annuity? How does the value of money change with change in rate of interest and time duration? Explain with examples.
2. Explain five different kinds of capital Budgeting Appraisal methods used.
3. In relation with the financial markets what are the different kinds of investment risks? How do you measure them?
4. What are the different costs considered in the cost of capital? What approaches are used to calculate the cost of equity?
Section-B
Case Study
A company is considering the following investment projects. All projects require an investment of Rs. 10,000 :
Projects Cash Flow
Year 1 Year 2 Year 3
A 10000 - -
B 7500 7500 -
C 2000 4000 12000
D 10000 3000 3000
Case Questions:
1. Rank the project according to the following :
(i) Payback period
(ii) Average rate of return
(iii) Internal rate of Return
(iv) Net Present Value; assuming discount rates of 10 % and 30%.
2. Assuming that the projects are independent which one would you accept?
3. In case of a conflict in ranking according to the NPV and IRR rule which project you select and why? Explain with example.
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