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    CAPEX Answer Sheet (Test Number I)

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    rasaram
    The document contains a model solution to questions from a CAPEX answer sheet test. It includes responses to multiple choice and open-ended questions relating to investment proposals, discounted cash flow analysis, and capital budgeting decisions. Calculations are shown for net present value and internal rate of return to support the recommendation for a proposed waste processing project.

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    CAPEX Answer Sheet (Test Number I)

    Uploaded by

    rasaram
    21 views2 pages
    The document contains a model solution to questions from a CAPEX answer sheet test. It includes responses to multiple choice and open-ended questions relating to investment proposals, discounted cash flow analysis, and capital budgeting decisions. Calculations are shown for net present value and internal rate of return to support the recommendation for a proposed waste processing project.

    Original Description:

    Financial Analysis, Forecasting, Techniques, Projections, Estimates, Excel

    Original Title

    1modcap

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    The document contains a model solution to questions from a CAPEX answer sheet test. It includes responses to multiple choice and open-ended questions relating to investment proposals, discounted cash flow analysis, and capital budgeting decisions. Calculations are shown for net present value and internal rate of return to support the recommendation for a proposed waste processing project.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    21 views2 pages

    CAPEX Answer Sheet (Test Number I)

    Uploaded by

    rasaram
    The document contains a model solution to questions from a CAPEX answer sheet test. It includes responses to multiple choice and open-ended questions relating to investment proposals, discounted cash flow analysis, and capital budgeting decisions. Calculations are shown for net present value and internal rate of return to support the recommendation for a proposed waste processing project.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 2

    CAPEX Answer Sheet (Test Number I)

    Your Full Name Roll No


    MODEL SOLUTION
    Answer to question number 1
    Question No. The Question Your Response
    1 (a) The arrangement between M/s Cash Crazy Limited
    and M/s Money Provider Limited (as mentioned in
    the question) is commonly called
    INVOICE DISCOUNTIN
    !RR!NEMENT
    1 (b) Please mention the e!act name o" the means o"
    #ro$ect "inance that the concerned com#any is
    contem#lating resorting to
    ISSUE OF CONVERTI"LE
    DE"ENTURES
    1 (c) %uch a #henomenon (as mentioned in the question)
    may arise i" the concerned division had ta&en a
    #articular action during the year '(1)* +ou need to
    mention , what action-
    DILUTED #i.e. $ispose$ o%%&
    UN'RODUCTIVE !SSETS
    DURIN YE!R ()*+
    1 (d)
    First Question
    .ad the com#any com#uted the /00 in the instant
    case and had ta&en the decision to re$ect this
    investment #ro#osal would you have su##orted their
    decision- Explain with adequate reasons.
    YES
    The /00 measure would be a
    reliable measure in this case (no
    interim cash "lows)* The /00 1 2
    3 (in this case) is less than
    investor4s e!#ected return o" 53
    (as a##licable in this case) and
    hence the #ro#osal may be re$ected
    Se,on$ Question
    2hat may be commented about the actual 6P7 o"
    this investment o#tion- Explain with adequate
    reasons.
    DEFINITELY NE!TIVE
    8##lying 23 as hurdle rate 6P7
    1 (* Thus i" 53 was a##lied as the
    hurdle rate (as a##licable) 6P7
    would have been negative in the
    instant case (5 9 2 , given)*
    Answer to question number 2
    The Compute$ N'V #in Rs La-hs& . !s Re/uire$ 'ositi0e 1 Ne2ati0e
    33 #!ppro4& 'OSITIVE
    %u##orting 2or&ings (in res#ect o" answer to question no ') , given below
    Computation of Operatin Cash Inf!ows from the propose" waste pro#essin business
    Details Year * Year ( Year +
    %ales )'( ):( ;'(
    8ttributable Material Cost <( =( >(
    2age Cost ?( :< 1((
    @verhead Cost (0elevant Portion @nly) =( >( 11(
    Ae#reciation Charges <( ); ''
    /nterest Charges 1: 1' ?
    Total 5!#enditure ';: '>1 )':
    PBT =' :> >'
    (Ta! C ;(3) ('>) ()?) ()=)
    P8T ;) <) <<
    8dd Bac& Ae#reciation <( ); ''
    Operatin Cash Inf!ows $% &' ''
    Computation of In#rementa! Cash (!ows ) As per the i*en #ase fa#ts+
    Details Year ) Year * Year ( Year +
    @#erating Cash /n"lows (as com#uted above) >) := ==
    Loss o" 0ent 0ecei#ts (Ta! 8d$usted) (?) (?) (?)
    /nvestment in 2or&ing Ca#ital (/nventories) ('() ()<)
    Com#ensation #ayable to the Contractor ()()
    Contractor4s charges saved (Ta! 8d$usted) )( )( )(
    0e#ayment o" Loan Princi#al (<() (<() (<()
    %alvage 7alue o" the Machine '(
    Ta! %hield on Loss o" %ale o" Machine 1(
    Total /ncremental Cash Dlows (<() )' ?1 :1
    AD C 1<3 (Eiven) 1*(( (*:= (*=? (*??
    Present 7alue (P7) (<() ': ;? <)
    NP, - '' (Positi*e)
    Note
    8) 2A7 o" the machine at the end o" ) years 1 1<( , (<( F ); F '') 1 ;;* %alvage 7alue 1 '(*
    There"ore loss on sale o" machine 1 ;; , '( 1 0s '; La&hs* Ta! shield on such loss on sale o"
    machine 1 ';G ;(3 1 1( la&hs (a##ro!)
    B) 8ll "igures (given above) had been rounded o"" to the nearest la&h
    C) 8##ortioned general "actory overhead e!#enses are in the nature o" irrelevant cost in this case*

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