MGT201 - Financial Management Assignment No. 1 Solution Fall 2017 Due Date November 16, 2017 

 Financial Management (MGT201)

 

 

 

 

Due Date: 16th  November, 2017         

Assignment #01                    Marks: 25

AMS manufacturer is considering to expand its business by installing a new production unit. Management is considering two options for new production unit; both suppliers are claiming their offer as best in terms of less cost and more future inflows. To analyze the feasibility of two options, management has to take decision on the basis of NPV and payback period of two investment options.  Details of two production units are given below:

Year   Cash Flows (Option 1) in Rs.  Cash Flows (Option 2) in Rs.

0   -1,200,000  -1,200,000

1   500,000  400,000

2   300,000  500,000

3   300,000  450,000

4   400,000  350,000

 

 

 

Being the student of financial management; you have to help company to choose the best option between above two mutually exclusive options (1 and 2), if interest rate is 12%.  Your decision should be based on following criteria:

  1.  If you apply Net present value (NPV) criterion, you will select which project and why?

 

(5.5+5.5+1 marks)

  1. 2.       If you apply payback period criterion, you will select which project and why (5+5+1

 

marks)

 

  1.  If management wants to take an option that is most liquid; you will select which project

 

for AMS and why? (1 mark)

 

  1.  Is it rational to take decision solely on the basis of capital budgeting techniques? Why or

 

why not? (1 mark)

NOTE:

Formula and complete working of each part is mandatory; marks will be deducted in case on incomplete calculations

 IMPORTANT NOTE:

24 hours extra / grace period after the due date is usually available to overcome uploading difficulties. This extra time should only be used to meet the emergencies and above mentioned due dates should always be treated as final to avoid any inconvenience. 

IMPORTANT INSTRUCTIONS/ SOLUTION GUIDELINES/ SPECIAL INSTRUCTIONS

DEADLINE:

       Make sure to upload the solution file before the due date on VULMS

       Any submission made via email after the due date will not be accepted

 

 

 

FORMATTING GUIDELINES:

       Use the font style “Times New Roman” or “Arial” and font size “12”

       It is advised to compose your document in MS-Word format

       You may also compose your assignment in Open Office format

       Use black and blue font colors only

 

 

 

RULES FOR MARKING

       Please note that your assignment will not be graded or graded as Zero (0), if:

       It is submitted after the due date.

       The file you uploaded does not open or is corrupt.

       It is in any format other than MS-Word or Open Office; e.g. Excel, PowerPoint, PDF etc.

       Not submitted as per given format

       It is cheated or copied from other students, internet, books, journals etc.

 

 

 

Note related to load shedding: Please be proactive

Dear students!

As you know that semester activities have started and load shedding problem is also prevailing in our country. Keeping in view the fact, you all are advised to post your activities as early as possible without waiting for the due date. For your convenience; activity schedule has already been uploaded on VULMS for the current semester, therefore no excuse will be entertained after due date of assignments or GDBs.

 

Tags: -, 1, 16, 2017, Assignment, Date, Due, Fall, Financial, MGT201, More…Management, No., November, Solution

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