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    Anirudh Prabhu
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    Capital Budgeting Solved examples

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    MIM-FM-CAPITAL BUDGET SOLVED PROBLEM

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    Capital Budgeting Solved examples

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    58 views32 pages

    Mim-Fm-Capital Budget Solved Problem

    Uploaded by

    Anirudh Prabhu
    Capital Budgeting Solved examples

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
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    OLVED PROBLEMS | s | __ SOLVED PROBLEMS _ “Type: Payback Peviod iustzation 3 vines Camo a men Sab» Aa sl. 2000 fasion Sree» nanclat anagerent OST Lignan a achinetcot of Rs 800 i @ ebay fF. 0.000, ono Foti coats Lil 3 Papa ed lustration 3 vines he a ca cay a an tir proc 3 ys es SS nen ans awe et payback period for Vitor Ld, . 3 $000 rspecivey. Cacase he eats Sato Seat ra oa compart Pet ‘Saviegs in Ma = ‘Re 15.000, [Yer “ovale Gah fons eRe —— eee Sa — a a 4 Oil I pe Tana el TF | ane 7 | ss | se . oo ES yt @ 2000 ome Paw +a _} See once Bee Sein ; ine 0 a » ‘ge 1 tia ag mt 0 89 or aul Bilecrm 9 um cry co. eter z roe ret New tos nde omen a0 SESE Fei te oe ro a he 7 jal eset Particulars fasting A] Wien _ eaters “zg Ca | same =e ‘gongs. ‘Bina gin scape es, "ag neo Ca) foie emrnerianere = itusaton somcaa ricer eo} 2] a guest be Wonton S85 ee at | 8] s| a | eet ese Jaton sme og Estimated Lie 10 Fees ene re. {wo | "¢ 5 | Sean 7 1 | | PRR "elo ee os Fo ape a pm Ba wou aon [Desa | Pema et ‘basis Payback Period? ape eeeitnaree SB Sotto on —— Statement Boe | f Pos ee acik ae | ase) a a Sa eS |. Ae Seca |B | ‘8 rao tts 2 as 4940 ys. ad acring path pei - te bass of protabity statement gan petra oe 5 pvc Po Tieton “rn oar ln ening 686 see ra Sunddmectio ayn prion Rean ei cen e020 ek bse mois eee oe em fr = — an = emo fe oa ily ol He papi ds fa Pat i Ns alae Payback Pray ipo Taxon en ewe Sotstion Shonen Cash ows er cot ite wees fee ison PRE Pepa CS . | 217s. Sy _}«! = = (aated_Pyeack Paybek prota = Anal ows» (ES ck opto! budeting . 2 0-29) Sugg": The move ar shows "oP i ster 18) Tho poet any poy Mustration 6 Ai doting aes no ont tea inet The a ho sana ade a etching We ay oak pet an mag Lc ye 20 Ol te nw mine etme etomatoe |e i es Unetrtas lgvor Tan and dep Solution zn | A calc a PyacsPctaiy ——__Sittenant showing Arnal Cah tons Eset ae hang te Pays Paved = Lit Oigallveinea na Average Cash ws Machine | Uschi @ ‘3000 | "sao cis | Son sams faye fazed on Paytick Feed, Machine Phas a shane pack gerd hence & shud be trea Machine Payback Peat» Arm Cash nos (Estate Lie Pytoc Percd Werine® Maen 4500 «(4~2) =600«(5-3) Fs. 2000 Fs. 1200 Seagestion: Baod on Pyeack lisbity, Machin © wad b rene she pack etait higher an Marina Iustestion 7 Frame own sas Omega i aust Paytck Pasa an Payback Pcishiy Re sales 00 Voraiecost 3000 Tels lala rontcon 200 fxd cerca) (Pape Pes : roc des (: Times sate Pompey ee covet he Sabon aera hot / ree vet! [a ig ay 2 pea ety sin yoeresin 10a (802 =m 00) (W) Acomograetfonm teat A ma me BE en —2 2 ee ees oreo peace B estmeane _ (int nena Se vay) Mon et puppet i (Comets Seante) a ene 19900, 1000 = §,000) = ae. (282) so seat ge, (st _Pac a robwc peta, is, “Cle Foes ferns aan mesa Ih bc Ot iw rey prow aah ae ‘machine which has been in operation for the ea wstaton us wnes ob anocine cata. {90000 Tate cis macines | ses macinea Ses erg eae oye and scp valewaldbe Pe 5.000 “he lloweg ces we pvc ato. og Pat ws. 2000 ener i trae = oma srs pr yer ‘Som Depeitnn akesy charge) suMbess ‘her oureape vr em san oa 5 9, “bonnes eee e th Pou Py 7 een ine re (G)_ KRM Pezring Rat Reems ser at Solution! Nclcchelucday eee fo | — tot neal ash ows Tra | ,, Assuring Wat eave ss ad lola aga lr he ee are ole [| hte coe eres nae 7 | | i Oerecmennsntnramesscomegesren ee eae or "35 | Sotuion \“ fue | |e — Sr Stee |e ee |r fmpecareer ll fee oe - J Sch aon | (ae =| Financ Manoeement (5) id crs «se: sae (teeters — |agmone eaune+) sz00m | 28 fea La Tbe emae | az lands one ceas | gn 299082 107 seaman viove |_| @) e&) ‘Suggestion: Shea be ANRal ta New macine ihe 3 compre mach, ene Now azine shu pene? stration 10 ‘ein fh (1) Pay back ef ard) ARA. Foe town ison a popsed ; “Esimaied We » 5 years on am yegreratn “Gath ntows | Curative Cash tows) = (Rs) sy T fee] ier som r| | 2 ,so0000 “000 Gama) in | “weazon | 900 1000 Toa 35.000 ‘000 = 1, ee PayBacPeint aye, (S- 450100 “oi ) 2388 ye08 eon oie sem 280 no a : stent _(sesnainet-Sens) or. ++ Nat Working « S80 € : ) + wae « F (2). nn oon sxe aa sn 28 ec Type one lastration 1: rt el LOD, xine 20 ese ot ue ail a acs ov te aw bet hae al Ae hea eo itnetibeitn st'spa utes scsrvectan Solution staan af teats ing eam le oma <28t8 —— e800 Sloe Prt a Sugqetlon Shea NPV apaeteceraalbomaeE Iastetion 12 ‘cama cence pj wn ty. 0p ea wet 008 ree aswel ercinyhe re 000 ha ‘re amatcan taboo eal 2p. rman ney. {Ect kh tr eso ae eo ote aba my cme n Sita oto popes ete gar lat mehr pt abl ud PY me As sea Paack Pood pos gro lang mas es an ees fel sess) sco ores cing dtr) 008 ‘typo yareerore eden ET noc Manageme 485) ce or | ; | Aste resent e087) Hi | i: peel | |e ston og PayscPet —_ aa 23 =D sslton- sou ete Itystration 1 “rien ow Somer susie ment Tat dB = a | " | : 8s : wiles Sa aeRES : i eeecoaren 5 ss a cet : | = justration 13: ‘Sat Compary is ig cosetng the owe aig Be 20000, Pa 170000 a, 240000108 inyiaesteoe ak hace press ier of pty aor 9 Pt _sasonbe inant 1 vee rage] = eee ivesnee goign cash the ater cash iors 3 relay nde eho “Casa 9 Py Bk pd ee ain Ga cestabousng Vr denial, rhe ta stories Wen oulsyosOae7 WY? Sataton firm acre ats (Oeste | ver | cra ‘Cumulative CFAT car uu 0 = | it | igs 4 rrsenoreet Nemes tas nS scree 7 ‘type: Intemal Rate of Return (RR) ikastration 15: Sovecage Covsary US rset ee Tie cag gia s Fa wavs yeu TT ere 2% on Viner Down Vive 0M tans eae Tax RO aS eect rasngeans es wousyauressnmensscamng Papeentae BAe gnainen soopeantancar Bae eral Rats of Rom Maroc? Solution: ‘CoaT Taemag | _OTS ms) Ter ie Te aes 2 | am ees | 2) Hees ieee | $_ | ties | sestee | “ts _|_ ize | | Fnancil Management (MS) me ita Budgeting BBS a0 ata E sae ey Tao a ee 3 28 ao bert SH Be afc as Se aa tee wa era [CTT [FT | ATO <3 it T wo Toul craT | i] Bs ioe [oe | ose IPR (Pox) aiaao=a00. 5 | ime | ame | dee sms Einar 0 2) Hh | Ge | des eos saat + | ie | ca | anne iene oy FIGARO op 188 =0.*57craTo, -PvGrATO, ~ — 0, Fora rect qty" 195 BSE os oe Tes on fea ue ae viele es =e ‘pa Rony Tate arose ec Shyer, Sop See he AR ver tn a eat cas hy capone se Pek poet ast aed cs = fiastraton 7 os “ th ore owing pita eae wich he mst rotate poe. Coda oP esos (CAT NP ta and 10% i be poste, Sree file bine ee er rae seta gtge etenenar pcs —| ej ae te SN aER Tm rem poerne ever a ams ‘a 3a | a | aa ag : oo | ce | ee ae | oe | ie | @ | ae ; = | ee e| a i YB : 2s wa | ec | 5 300/00 0.00 1 ‘0000 O67 1 | ose” a : S a : les | Lies | conte aaa FoePapes Peet ea ATENEO ae Bon 2) aor He ‘Fake Payback Petiod 5 Said Cote ae rat ance aa os : ‘S i Ce) a pera Ta soon ane te Sot Rae nani Management (M5) ‘ota! Bedsting 15 ese, wer] oT | Prem | Woarew | Fre Tetneteonaae LU is) ee 4 Hon teehee t [Re [te | tum | or o | tae | te | ime | Sim | 2 | sBse | sme | bare | ores oo a i | ise | ne oes Tate ] | Lf te “os [steep | Tenipene7) | 0 RESTS 6) , | ae es ae | ae | See} Sep | = oo BB | $88) fen) gen | ee see Lae [a Resign Oops en Geb Seah UHR aed ven keg toa Pra : ote Seance Supgeaon: Stee eR ot Pret Yn Yisnermst potable pect stration 1: Pree X a Pj Zeno Propet ‘he rane srr corses ‘Aconeny xnsrg be wo rly excuse po Te race taite pie win rgb NPV sh be chosen: whereas De Magog Oreck tao Cine orn eovdbe conse Be prs have gan tect yes Ipabecostl pial 1s Tevsaloutay Rs 218 sans a3 nda ccrsseny fry be erg oe PORES Solution "You ae regis eae pecs on PA, Zoe “RPV Pland aa on Pe (@xseden egal ieee Proje tone Fone” 10 tae Ar Pt Aer Tax 188 Noa reser (Baseden rage veces) monet e090 apie Ema" sear aa aa ‘war [aaron | Cimisie Cahinows Coins | Cums | vee | PUR Fess SS vo ;-) 3s Ey a0 wo | [DD eT Se \a | aos sa 2a | on | Som Financ Management (M8) ona Budgeting ne racemes] — eae a i serrate | tum Sa | oe ae a Tes PK Puc Gam ito (ers re a ries Pret aaa _2ourea sano) 3 se eieae se Pope (oir Rt een canny Mets enn ison, we i a I ig Gen a = 19: SSS cartes | AR wre | Wem) Thea tae sone eatatsapcat ol eres ea noms @ 20% oF 10%, determine for esch project Parad, Assuming sega ef enn fe (a) the pay back pero, . i - 4 = (0) te deccurted pay back period, : Pd i (6) the proftabitly des, and pele} te tS (8) “ema ate rum, ‘| Bs te i Yuma se agi depron | 3 | sm |_ te ss LS) [sateen a =P 9380) Expected He no sabage) co a — | Pct tenet eta | pom | me | we 1 ; we | Eat | 10% «Benn ve0es0 “= 1) ; | | aia i 17% + aps00* ‘Solution: a (Peck Pei tee noe | Wrer | ream Ya | se ye) te ear | Fo] _ ra a 5 rr ie [ae De ae = || wre) s e910 2 10000 0000 sam sao0e0 ea [ita 8 aoe 2 | Be | Sie | es ee | y | ae | te 28 a 3 40.000, | a | ry | i aon C ea 2 | Mem |S 2 = + | tim | te 4 5 Fens a race is [ae baad esi Syensan rents nani Manapement (N85) apts Budgeting LL te 1 a ip ‘Cole FAT et hg att 7 va ma i wl ows rT ye | | | se Pomona Sa Cy] |) i | S| gs | cna (3 po S00 490000 at Project P i | HB | ge | ee : ar =e eo pocuarewcs — -oreess (mae i ‘yeaa mon ages: ony oes rope i penetra tha hie eh wot To iscounas Py Batt Peto so] Sa TET tC fe) — as | aie ji] se sno | es | fats ‘ Se | tle a :| # | | & = ji | | sl se i] t | os | ee | ee se 5 peyteaend— =tren (SB) anys ao presen | ERE] = a) 48) (Rs fl —\— aay | 2 || & os een eareot -twens (SS) ote ‘since as & onpsen: eon dace yc i Pr 8 setup metre oy eta PLE =| reaver || i | te [a |) te Sugpeston: ated en Pl Prec Os sige, sete Pi gutrba es (a) erate ot eta Foe Pay Bak Pasi = al Os ee Pee a CS (ye 2B ao a2) As porary bl sous heel yer Decoue at cs cs Bu soe wi been ose gh nega NP hele ing 1% att ica oes Rl a oon a ve Ite Tala Err = TT | rT TORT] t Bs) fs sf) T) ess 5 | gm | est | Soo | om | Sm eee ee t Fesicnt TT i ae) 10 RESTO on -1ay ‘a0 zen aren) wa FeePaahece ed as raphy cet hye, - none ee | 2 2 [ier [aia] pikes | AT —a_| ree! oo Cees {amas reac) = 10s PSSAMSE as 10) 20% ap) Financ Management (88) suggests Seen A Pot Ois apes, nce RR AN as corpo Must inns Sntte aopeston as on OV Eas Teale “Corman Comoran is vetsng na new prope Wl vernet re pet R 20 Sacer Tat 8 5A a Cove | textarea) ae a ARR e L__ eases rons | — 2208 Oh Bazartaepy ck peat oe stores “ie 2 acer ey ac nn = weowedPajtackPeted © «9 (20 N6ar FT a tn ae a Fee iene nee seats Solu - om cn ar = a Discounted Payback Prod Be ca = | ace] wae | ae | snes | Gee, ‘Mlusteation 21 SAT 0 fry |B | ise | me | ite | ine | inse ‘hese sontinnsnen paste guven Be | cmon | Senn | Seon | ftoamse | rosso 'iainvesinert tan machey se | mee | Bee | teem | tease | Taam ‘astral sit woneg ep | (cuaer a ‘ess eye yens a oes eo OT Set ren nt a Vacant "20,00,000 00 | Fixed overheads - ators (eg etry ed ery es Sus [Semen |_seaaany ‘eof cepeiaon en lan and macinay2cn OV matics Coren sauna Snogn ie efsou wdmaciney OV see e | wrest vor? | azo ‘epee eee omc tearoe| Ponres ete ad Siorecatvers Sora = ‘e ua Fosters saree nectar = : ‘esas Tx | ane aa ae ‘m-[-on[ ogen | este sens st E at tsi [owe [oar os Beem ea aaa ene ‘ur [age [ou Boras Bons NPAT «Cagle "0 ssconta ‘ aoe 0 EE (m)_ Based on Average nvesinent HI IPAT gy age vet = Twa {enc tet uo4 T | iDepecatontes2 en noe biov Fee | aemeatorvesra2e% woe errr reer reenter eet . rant Manages (05) cat Boeing |Lgeaineresn0o [tae ¢ | : 2» bi a rapa bre sraaaammaeamoe mnt ce Saran |For anus ‘ens 200002 eat ta ar oa D ara Tec yc = =| ‘losses conto haha lomo 4 . o- ste eas he ihe NPV. Ge Reson Serna o ‘une [conan aay ee | __ = 7 as | =a DTH POET ami warm] tom | m0 = ‘opener Siuo) cece] soteon| Ga ae sent 60 Bisa mine] sssr]| S| ae nea ts) wesiao| eel tne 7 fs, Ste ecea ‘noo| came ea i a ‘Soe Ten Siazooo | meazsaa| avatars] eae Ramee ae Stopestons: Corsini orcas RV ists cme Cera ne ett Cn pene bss 7000 sa prt nen eu eva ray ssaaet secu a re ee ca Sa Mlustration 25; “ag is coting he oun pore momo ps ae =— = : ae see : ; ae . SnaaaaR Rs __ ‘Outlow towers working captalisincumed atthe beginning of tis year, Solution: ee erent ‘eae —] sy ———x — came gs has Teme | | me Hf ‘soe ore 730.000 ‘sasa7om0 a oon te | ge | gees | Be ae a ae sone ce | it | BASe : = sna [ = Doanaratentect +3-( SOLE c fe += 3.818 years (approx) E im ‘Type: Capital Rationing, = SE score tteono = pep gee ap, — : fe ; se | —2 a “rac Management 85) opt oueeing : suggest: erate i lt esc te i nyt ata as snecngae nig marr exaneaeo9 teas ah roe ‘aoa sei Thustation 2 F sinc ala i i ec pl wen aerial i Te " o a a a pee ergy ly ee gee bbe ° = a cs ee ee ce 2 x tot ee +e pe pets | S| ele ian Pn eas da Be lr & 1% Lae Lis Le |e onic Alpes OMDELE one eines ce orcad aces ‘cele ahve pros rb ceed? ‘ston we ane cn be et, soy Solution: cma than once. istiRy cds, None te jects can be delayed cr wedetsan mere cs sage] Solution. 2 t te ‘Bon co rl : : mM Sa ae — : : . i ae ‘ | Sian? ‘ . ves 3m * feast i za] | SessionstProeciss pasta aod wes any ; “Th es five projec wl lie the avaiable funds completly, ork Piet iustation 25 entation 25 ae pops cmon sett The eae of ese ‘ t oqaae ier : * 2 oemor | 5, Ey a = wa m fe on te ie! > geass He se a HT EC ustaion 27. Solution: Hurt Duty ies he sing oman — = a inert a3) 1 eee — ‘soy 7 2 | . \s wet | nt ry | ie T ‘mow an 5 = 2 | cans | Pome | igor | nk | cays | Mion tet oe ee ray co (as) ‘Gard Fi re mulvaly exaive. None of fe projets can Be delayed or urdstaten a nae ane, Suge ers chan 4 as [ae oa Solution + [o: [cewe in age 3a pling «Ra Lis 3 |e past] ous st mm ‘aro o oo. at 38850 50 Option Project | - imc aL = — aan ys RNAP a bm . wsenwtopu sacra bison Tiusteation 26 " a “Jack & i Lid. ures the lolowing onmation: s ‘ete he e000 | ! == “Suggestion: Option Ive. Project P ard Oy, srce the NPV cl his combination isthe highest = Roe snarestusimeonecree ncn astation 3 “iy craarg apse amass XandY net 2 mae ate Fone ‘conn sumate ogpe eho Rabo enema ‘oanmee ojatatly we teas ‘owe (©) Tacoteteaias 10%. {e)_ Ine PuPe ar hr yor eng 123455 047 ae 0509, 06,0751, 0589, 21 Ostet apes (a) Desrctenfrter macnn Xara «Re, 89000 ur armum wisely 1 —— ‘Ser ed ase = ‘PAT Depreciation = Cash infiows ATs ition = Cash now [as | om ex | Sie | sm be) ete ‘tim | Sn | Yom i) oie | Sam feo | fem | tise fi Bo ‘tm | fm | "son | ee | eee ee | tom | en Slee aL EL epee Creatas se] an EaRAaTN a (Orginal rvestmert) "Origa! vestmert cine, ace Gee) | Geen) ae HF : vam | sam” BE | BB Essen KBR (geal vena Machin cangaaren be ABR eae Prey nt) ae oe ora Pato of Ren tat, Sse eee oe ~ Fiat cask sows —— velcro Sreste Fess an Belo bu eter sob mca Beret taro tesencestancaabe Wane kree be Papuan ‘Ach se mage bene to canpeig pets mh et an ei vein x 00 ard recreate eas ase — (a [rs 2i00 | a tenn Slee ese | Bata somo | sesacon ‘an rota ex _| ey” | tan t= tae et ‘oo 1 a0 Cone S| Bepecean | tar . rani Morgen (5) capa evgeing . Mustation 30 (ou, 3, apt 002) ap Ms On Tatas hte ho ks A eB eee #8 lca elit ene inesi oo tats nie at pest Bs R40 Lh es Se ee hee en ientes = feapa reno oe me 3 a a eo Sa ager mes [at eae | ese = = “copminagee raga 1 ion — “aig ta] — Ra) ee : =e (egal egg eee | eee | ee ee So "ie = ‘so lil ong Wats alte a | = ‘so cd 3 sean yo @ tts ste #0072 07 td OEED tape argh Pe Ta 2 | ie ee ws || Saireneron ee ae See tte jo soe a Pay Eo Picdbr | 3 | ae eon = Foe Solution é ‘tebe mae Piheteene =aye (oar ao ea sopacct =2» (SESE) zle{z|s 4 ome | oso a 5 aiciiict 2 oe enriutssone| sae : nar xp = nvsGahions | 208] son ninnine a Fae ® oe oe aa ean ug [RAS rae re pete ay = Be miele ‘e tee | tose : sit plilel 3 Sie | ieee oe =e ee | smineseineinen) eueemat A teva us| ot Pr FoetB wrens ra NPT ran Ps ae er Frye ered at ae es : Fist Asst 00s 2 2 Yar [ pat —Poepn | oe aae [ BaTE si ee yf a yon

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