1.

Sudha is an enterprising business woman who has been running a poultry farm for the past ten
years. She has saved ` 4,00,000 from her business. She shared with her family her desire to
utilise this money to expand her business. Her family members gave her different suggestions
like buying new machinery to replace the existing one, acquiring altogether new equipments
with latest technology, opening a new branch of the poultry farm in another city and so on. Since
these decisions are crucial for her business, involve a huge amount of money and are irreversible
except at a huge cost, Sudha wants to analyse all aspects of the decisions, before taking any final
decision. (i) Identify and explain the financial decision to be taken by Sudha. (ii) Also, explain
the briefly the factors that will affect this decision.---3

Investment decision/Capitalbudgeting decision

Investment/Capital budgeting decision involvesdeciding about
how the funds are invested in different assets so that
they are able to earn the highest possible return for their investors. (ii) Factors that affect capital
budeting decision are: (a) Cash flows of the project (b) Rate of return of the project (c)
Investment criteria

2. Rizul Bhattacharya after leaving his job wanted to start a Private Limited Company with his
son. His son was keen that the company may start manufacturing of Mobile-phones with some
unique features. Rizul Bhattacharya felt that the mobile-phones are prone to quick obsolescence
and a heavy fixed capital investment would be required regularly in this business. Therefore he
convinced his son to start a furniture business. Identify the factor affecting fixed capital
requirements which made Rizul Bhattacharya to choose furniture business over mobile-phones.
-1

(1 mark) Ans. Technology upgradation---1

3.S Ltd. is manufacturing steel at its plant in India. It is enjoying a buoyant demand for its
products as economic growth is about 7%-8% and the demand for steel is growing. The company
has decided to set up a new steel plant to cash on the increased demand. It is estimated that it
will require about ` 2000 crore to set up and about ` 500 crore of working capital to start the new
plant. (a) Identify the decision taken by the finance manager in the above case. (b) Explain any
two factors affecting the fixed capital requirements of S Ltd. (5)

4. The Capital of India has been declared as the most polluted city in the world. Benguluru,
Mumbai, Patna, Ahmedabad, Lucknow, Kanpur and Ludhiana are also the highly polluted Indian
cities. This has resulted into a dramatic increase in the sale of home air purifiers. The prices of
these devices range from `2,000 to `25,000 depending upon the pollutants these purifiers
remove. Looking at the increasing demand of these home air purifiers ‘Pure Air Technology India
Ltd.’ has developed a low cost home air purifier in its R. & D. Lab. The company has estimated
that a commercial production of 1,00,000 units per year may cost the company `500 per unit.
For this capital of `100 crores will be required. The company decided to have both equity and
debt in its capital structure. Explain any four factors that the company should consider while
deciding its capital structure.-5

5. Sunrises Ltd. dealing in readymade garments, is planning to expand its business operations in
order to cater to international market. For this purpose the company needs additional
`80,00,000 for replacing machines with modern machinery of higher production capacity. The
company wishes to raise the required funds by issuing debentures. The debt can be issued at an
estimated cost of 10%. The EBIT for the previous year of the company was ` 8,00,000 and total
capital investment was ` 1,00,00,000. Suggest whether issue of debenture would be considered
a rational decision by the company. Give reason to justify your answer. –3

6. Anchal purchased a food processing machine for `10,000 from ‘Kajal Machinery Pvt. Ltd.’ She
found that the machine was not working properly. Despite many complaints, the defect was not
rectified by Kajal Machinery Pvt. Ltd. (a) Identify the consumer right that has been violated by
Kajal Machinery Pvt. Ltd. (b) Suggest the appropriate forum where Anchal can file her
complaint. (c) Can she appeal to the Supreme Court if she is not satisfied with the order of the
appropriate forum? Give reason in support of your answer.-3

7. Mr. Man Mohan Singh and his wife Kamlesh had bought a railway journey cum-reservation
ticket for `2,000 at Ahmedabad for travel from New Delhi to Kanpur Central by the Shatabdi
Express. The details on the ticket, including the coach number, the date of journey, etc., were
illegible. Hence, they were forced to buy another ticket for journey from New Delhi to Kanpur.
They applied for a refund for the earlier ticket but, as the Forum noted, they had to suffer much
for the purpose. In spite of the couple’s giving the Ahmedabad residential address for sending
the refund, the Railways sent it to their Delhi address. They approached Consumer Education
and Research Society (CERS), Ahmedabad for help. CERS filed a complaint against the Railways
before a District Consumer Dispute Redressal Forum, Ahmedabad City and claimed that the two
senior citizens had to face mental harassment due to the deficiency in service by the Railways.
(a) Can CERS file a complaint against the Railways before the District Consumer Dispute
Redressal Forum, Ahmedabad? Justify your answer. (b) Which consumer right is being
promoted by CERS in this case? (c) State any two reliefs available to Mr. Man Mohan Singh and
his wife Kamlesh. (4 marks)

8. Rita Sharma who works as a guard in a school, purchased two shirts for `460 each for her son.
When she went back home, she realised that the shirt was small in size for her son. She decided
to ask for return of money or exchange of the shirt with an appropriate size. But the store
owner refused to return the money or exchange the shirt. Rita Sharma was disheartened. Her
friend advised her to go to ‘Seva Sadan’, an autonomous voluntary organisation working for the
protection of consumer welfare. The organisation helped her by explaining to her the legal
procedure, as well as educated her about her rights as a consumer and helped her in filing the
complaint and getting relief. With the help of the organisation Rita was able to get her money
back from the store. Enumerate the rights of a consumer which Rita Sharma was able to
exercise with the help of the voluntary organisation.-3

9. Gopal, Mohan and Shyam are three friends having their separate small manufacturing units in
an industrial estate. They are hard-working and honest and undertake their respective
production activities following the good practices of business. They use good quality raw
materials and adopt standardised process. They fix the prices of their products with a reasonable
profit margin. But all of them are worried about the malpractices like manufacturing sub-
standard, duplicate and defective goods by the fellow manufacturers. Therefore, they decided to
form an organisation with a constitution of its own which is free from government interference.
This organisation would encourage consumers to strongly protest and take action against
unscrupulous, exploitative and unfair trade practices of sellers. State six other functions which
may be performed by this organisation in addition to those mentioned above-4 MARK

10. Mrs. Mathur sent a jacket to a laundry shop in January 2020. The jacket was purchased at a
price of `4,500. She had previously sent the jacket for dry cleaning with Shine Dry Cleaners and
the jacket was cleaned well. However, she noticed that her jacket had white discoloration marks
when she collected the jacket this time. On informing the dry cleaner, Mrs. Mathur received a
letter confirming that discolouration indeed appeared after the jacket was dry cleaned. She
contacted the dry cleaner multiple times and requested for compensation for discoloured jacket
but to no avail. Upon Consumer court’s intervention, Shine Dry Cleaners agreed to compensate `
2,500 to Mrs. Mathur for the discoloured jacket. (a) Which right was exercised by Mrs. Mathur
at the first instance? (b) Name and explain the right which helped Mrs. Mathur to avail the
compensation. (c) State which consumer responsibility has been fulfilled by Mrs. Mathur in the
above case. (4 marks)