Dept.

of Management Studies
JNNCE, Shimoga
III Semester MBA
III CIE Test
Course: Project Appraisal, Planning & Control Course Code: 18MBAFM306
Date: 07-01-2021 Max. Marks: 50 Max. Time: 90 Minutes

Instructions

1. Fill-up the details on the front sheet of your answer book.

2. Answer all the questions.
3. Write your answers with black-ink ball-point pen only.
4. Indicate the Q.Nos. and Page Nos. clearly and prominently.
5. Preserve the answer scripts safely and submit to the Dept. when advised.
6. Submit neatly scanned answer scripts (within 15 minutes from the close of the test) to:
papc2020tests@gmail.com
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Q. No. Question CO BTL Marks
1 a Explain: (i) Post-audit (ii) Abandonment Analysis 3 3 3
An equipment costs Rs.1,000,000 and lasts for 6 years. What
should be the minimum annual cash inflow to justify the
1 b purchase of the equipment ? Assume that the cost of capital is 4 4 7
12 percent.

Megatronics Limited is evaluating a project whose expected

cash flows are as follows:

Year Cash flow

0 -500,000
1 100,000
1 c 4 4 10
2 200,000
3 300,000
4 100,000
What is the NPV of the project if the cost of capital is 10
percent?

2 a Mention any three measures of calculating ARR? 4 2 3

2 b Explain prerequisites for successful project implementation 3 3 7
2 c A project has begun on 1st July 200X and is expected 4 4 10
to be completed by 31st December 200X. The project is being
reviewed on 30th September 200X when the following
information has been developed:
Budgeted cost for work scheduled (BCWS) : Rs 8,000,000
 Budgeted cost for work performed (BCWP) :Rs 4,600,000
Actual cost of work performed (ACWP) Rs 4,100,000
Budgeted cost for total work (BCTW) Rs 11,000,000
Additional cost for completion (ACC) :Rs 6,000,000

Determine the following: (i) cost variance, (ii) schedule

variance in cost terms, (iii) cost

Jawahar Industries has identified that the following factors,

with their respective expected values, have a bearing on the
NPV of their new project.

Initial investment 10,000

Cost of capital 11 %
Quantity manufactured and sold annually 1,000
Price per unit 20
Variable cost per unit 15
Fixed costs 1,000
Depreciation 1,000
Tax rate 20 %
3 - Life of the project 7years 4 4 10
Net salvage value Nil
Assume that the following underlying variables can take
the values as shown below:

Underlying variable Pessimistic Optimistic

Quantity manufactured and sold 700 1,400

Price per unit 18 23
Variable cost per unit 16 14
Perform scenario analysis

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* indicative