Scribd
Upload
9 views2 pages

Capital Budgeting

The document outlines various financial calculations and concepts related to project evaluation, including cash inflow calculations, NPV vs. IRR decision-making, and the payback period concept. It provides specific examples of cash flows, investment costs, and depreciation for different projects, and requests the computation of profitability index and internal rate of return. Additionally, it mentions the use of present value tables for financial analysis.

Uploaded by

sailikpandeyofficial
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
9 views2 pages

Capital Budgeting

The document outlines various financial calculations and concepts related to project evaluation, including cash inflow calculations, NPV vs. IRR decision-making, and the payback period concept. It provides specific examples of cash flows, investment costs, and depreciation for different projects, and requests the computation of profitability index and internal rate of return. Additionally, it mentions the use of present value tables for financial analysis.

Uploaded by

sailikpandeyofficial
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

Calculate Cash Inflow from the following information:

Year 0 1 2 3

Investment ( ₹ ) 1,50,000

Net Cash flow including 40,000 50,000 60,000


depreciation ( ₹ )

Depreciation ( ₹ ) 20,000 20,000 20,000

Tax rate is 40%.

In case of a conflict between NPV & IRR method of project evaluation, state with reasons
which method is to be chosen.

Explain Pay Back Period concept with an example.

The initial outlay of a project is Rs 3,00,000. The firm expects the following annual cash
inflows from the project over the years:

Year 1 2 3 4
Cash 1,20,00 1,20,00 1,50,00
flow 75,000 0 0 0
Compute profitability index of the project if the cost of capital is 10%

X Ltd. is considering purchase of a machine costing Rs. 1,20,000. The economic life of the
machine is expected to be 5 years at the end of which it is expected to produce a salvage
value of Rs. 20,000. The expected output from the machine during the life of the project is
as follows:

Year 1 2 3 4 5

Output (units) 6,000 6,000 7,000 8,000 6,000


Selling price per unit of the product is Rs. 10. Variable cost to sales ratio is 40%. Operating
Fixed Cost (excluding depreciation) Rs. 6,000 p.a. Cost of capital of the project is 10% and
corporate tax rate is 50%. Depreciation is to be charged under straight line method.
Evaluate the proposal based on Net Present Value Method.
The initial outlay of a project is Rs 25,00000. The firm expects the following annual cash
flows which from the project over the years:

Year 1 2 3 4 5 6 7
Cash flow (Rs.in 7 6 6 5 4 4 8 Calculate the Internal
Rate of Return on the
Lacs)
project. (Use 10% & 14 % discount rate for the computation).
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Present Value Table:

*******************

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy