EXECUTIVE MBA

COMPONENT-3

ASSIGNMENT

TOTAL MARKS 30

ONLY HANDWRITTEN ANSWERS WILL BE EVALUATED- NO SOFT COPY- NO SUBMISSION THROUGH

EMAIL.

Q: XYZ Company is interested in investing amount for new business. The financial details of which are as
under-

RAW
MATERIAL PRODUCTION ADMIN
PARTICULARS AMOUNT SALES EXPENSES EXPENSES EXPESNSE
Initial
Investment 500000.00
1st Year 200000.00 80000.00 75000.00 50000.00
2nd Year 300000.00 100000.00 100000.00 50000.00
3rd Year 410000.00 130000.00 120000.00 50000.00
4th Year 480000.00 150000.00 150000.00 70000.00
5 th Year 600000.00 200000.00 210000.00 70000.00
6 th year 675000.00 220000.00 225000.00 100000.00
7 th year 710000.00 270000.00 275000.00 100000.00
8 th year 675000.00 245000.00 275000.00 120000.00
9 th year 600000.00 210000.00 225000.00 120000.00
10 th year 590000.00 205000.00 180000.00 120000.00

You are requested to advise the company for-

1. Whether to accept the project if company expects recovery of investment amount within first 5
years?
2. Whether to accept the project if company expecting return from it @ 12%
3. Whether to accept the project if cost of the capital of the company is 10% for next 10 years?
4. Whether you recommend the company to accept the project?