MBA 4th Semester Exam,2020

Paper code: C23

Paper name: Financial Analysis of Projects

Time: 2hrs.
Total marks: 80

Answer any four (4) questions:

Q.1. (7+7+6 =20)

(A)

Consider the following problem of Assembly Line Balancing:

Task A B C D E F G H

Immediate A B C D E F G
predecessor

Task time 0.9 0.4 0.6 0.2 0.3 0.4 0.7 1.1
(min)

Total task time (min) 4.6

Assuming that 55 minutes per hour are productive,

 Compute the cycle time needed to obtain 50 units per hour as the output.
 Determine the minimum number of workstations required and assign tasks based on
longest task time rule.
 Compute Line Utilization or Balancing Efficiency.

( B)

There are five jobs at a factory. Each job must be processed through two work centres (drill
machine and lathe machine). Indicate the sequence of the jobs by using the Johnson's Rule.
 The time for processing each job follows:
 Work Centre 1 Work Centre 2
Job
(Drill) (Lathe)
A 5 2
B 3 6
C 8 4
D 10 7
E 7 12

(Draw a Gantt Chart with the sequenced Jobs and calculate the Total Elapsed Time and Idle
Time in each Work Centre.

(C)

Two experts A and B examined an activity and arrived at the following time estimates.

Time Estimate
Expert
tm tp
to

A 4 6 8

B 4 7 10

Determine which expert is more certain about his time estimation.

Q.2 (10+10)

(A) The following details are available regarding a project:

Predecessor
Activity Duration
Activity
(Weeks)
A - 12

B A 7

C A 11
 D A 8

E A 6

F B 10

G C 9

H D, F 14

I E, G 13

J H, I 16

Determine the Earliest and Latest Times, Total Float & Free Float
for each activity and the Project Completion Time.

(B)
The manager of a company wants to apply crashing for the following project by
spending an additional amount not exceeding Rs. 2,000. Offer your suggestion to the
manager.

Activity Predecessor Normal Crash Normal Crash

Activity Time Time Cost Cost
(Weeks) (Weeks) (Rs.) (Rs.)

A - 20 19 8,000 10,000

B - 15 14 16,000 19,000
C A 22 20 13,000 14,000

D A 17 15 7,500 9,000
E B 19 18 4,000 5,000

F C 28 27 3,000 4,000

G D, E 25 24 12,000 13,000

Q.3. (10+10)
(A)
A diversifying FMCG company likes to launch a Personal Care item and accordingly
intends to invest Rs 25 Lakhs for Pilot Study and Test Marketing for 6 months with
assumption of success 70% chance. In case of success the company proposes to build
a plant costing
Rs 250 Lakhs which would generate annual cash inflow of Rs 40 Lakhs for 10 years in
case of high demand with 60% chance or
Rs 20 Lakhs in case of low demand with 40% chance.
What is the optimal course of action using Decision Tree Analysis considering cost of
capital 10% ?

(B)

A company prepared the following Budget estimate for the year 2020-21.

Sales(Units)-15000, Fixed Expenses –Rs 34000, Sales Value- Rs 150000, Variable Cost-Rs 6 per
unit.

Find out P/V ratio, Break Even Sale, and MOS based on the said data and also calculate P/V
ratio, Break Even Sale, and MOS

in the cases as: a) Decrease of Selling Price by 10% , b) Increase of Variable Cost by 10%.

4 (7 + 6 + 7)
Hypothetically, consider that TATA group is planning to set up a pan India multi brand retail
chain like Big Bazar, Spencer etc.
i) Make an environmental analysis for the project
ii) Mention the methods that would you recommend for demand forecasting
iii) How would you apply Porter’s generic competitive strategy for entering the market.

5 (10 + 10)
a) Briefly discuss the various feasibility / viability studies that are to be made for project
planning and analysis.
 b) Say ABC ltd is planning to set up a large thermal power plant near Asansol. Which are the
various factors that you would consider in Social Cost Benefit Analysis for the project.

6 ABC Ltd is considering setting up of a project with an investment of Rs.100 Cr with an

economic life of 5 years. The projected FCF for 5 years are as under:-

Year FCF [in Cr]

1 15
2 25
3 35
4 45
5 30

The hurdle rate is 12%. Salvage value at the end of the 5th year is expected to be Rs.10 Cr.
Would you recommend to accept the project? Please substantiate your answer with
calculation of NPV, Pay back period, PI and MIRR. (20)