BA
25 Lakhs
(1) Started business with Building
Furniture 295 Lakhs,
Cash & 2 Lakhs
Answers
Answer:
Cash a/c. dr 200000
building a/c. dr 295000
furniture a/c dr 295000
to capital a/c. 790000
Hope it helps you
Answer:
Explanation:
PAPER – 2: STRATEGIC FINANCIAL MANAGEMENT
QUESTIONS
Project Planning and Capital Budgeting
1. Project X and Project Y are under the evaluation of XY Co. The estimated cash flows and
their probabilities are as below:
Project X: Investment (year 0) ` 70 lakhs
Probability weights 0.30 0.40 0.30
Years ` lakhs ` lakhs ` lakhs
1 30 50 65
2 30 40 55
3 30 40 45
Project Y: Investment (year 0) ` 80 lakhs.
Probability weighted Annual cash flows through life
` lakhs
0.20 40
0.50 45
0.30 50
(i) Which project is better based on NPV, criterion with a discount rate of 10%?
(ii) Using Hiller’s Model compute the standard deviation of the present value distribution
and analyze the inherent risk of the projects.
Leasing Decisions
2. M/s ABC Ltd. is to acquire a personal computer with modem and a printer. Its price is
` 60,000. ABC Ltd. can borrow ` 60,000 from a commercial bank at 12% interest per
annum to finance the purchase. The principal sum is to be repaid in 5 equal year-end
instalments.
ABC Ltd. can also have the computer on lease for 5 years.
The firm seeks your advice to know the maximum lease rent payable at each year end.
Consider the following additional information:
(i) Interest on bank loan is payable at each year end.
(ii) The full cost of the computer will be written off over the effective life of computer on
a straight-line basis. This is allowed for tax purposes.
(iii) At the end of year 5, the computer may be sold for ` 1,500 through a second -hand
dealer, who will charge 8% commission on the sale proceeds.