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Question 1. Mr. Mehta invested in equity shares of Edelweiss financial services Ltd., its

anticipated returns and associated probabilities are given below:
Return %    5    10    15    20    25
Probability    0.10    0.15    0.20    0.25    0.30

Calculate the expected rate of return and risk in terms of standard deviation.    (10 marks)



Question 2. M Ltd introduces 5000 units in a process at a cost of Rs 20000. The wages and overhead

incurred are Rs 12000 and Rs15000 respectively. In normal course 10 % of the units introduced are

defective. Actual output of goods is 4400 units. The rectification cost of defective units is Rs 5

per unit.
Calculate
The cost per unit
Value of abnormal loss
Process Account                             (10 Marks)


Question 3. a) The following information is given for a corporate bond. Price of the bond at the

beginning of the year: Rs. 95, Price of the bond at the end of the year: Rs.99, Interest received

for the year: Rs. 11. Compute the rate of return.                     (5 marks)
Answer :






b) Suppose there are two profitable stocks in the market P and Q. Amit wants to make investment in

one of the stock. Suggest suitable stock based on return.        (5 marks)

Probability    Return on stock P    Return on stock Q
10%    7%    5%
15%    10%    8%
20%    12%    10%
25%    15%    12%
30%    18%    14%



Question 4. Mrs Mangla owns a house. It is given on rent to a post office. Municipal value of the

property is Rs230,000. Fair rent is 240,000 and standard rent is Rs 234,000.Muncipal taxes paid by

Mrs Mangla is Rs 50000 on March15,2015 and Rs 55000on May15,2015. On May 1, 2015, rent is increased

from Rs 15,000 to 20,000 per month with retrospective effect from April 1,2014Arrears of rent of

2014-15 are paid on May1, 2015. Find out the income chargeable to tax for the assessment year 2015

-16 and 2016-17.         (10 Marks)

Question 5. a) Given the following as cash flow from a project, calculate the NPV. The required

rate of return is 9 %
year    Cash flow
0    -150000
1    25000
2    35000
3    45000
4    45000
5    55000

Whether the company should accept the project or not? (5 Marks)


b) Given the following financial statement data, calculate the net operating cycle.
Credit sales                        250000
Cost of goods sold                    200000
Accounts receivable                      25000
Inventory closing balance                  23000
Inventory opening balance                  20000
Accounts payable                      17000            (5 Marks)




Question 6. Given the following costs and quarterly sales forecasts of a product. Compare the two

strategies:
a. Strategy 1: Level production with constant workforce level (5 marks)
b. Strategy 2: Chase production by varying workforce level (5 marks)

Quarter             I         II         III         IV
Sales forecast(Kg)            80,000             50,000            120,000            150,000
Hiring cost                 Rs. 100 per worker
Firing cost                 Rs. 500 per worker
Inventory carrying cost         Rs. 0.50/Kg. per quarter
Production rate per employee     1000 kg. per quarter
Beginning workforce             100 workers
Labour Rate                 Rs. 5760/qtr.