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MCARTECH Pvt. Ltd. is considering two mutually exclusive capital investments. The project’s expected net cash flows are as follows
Expected Cash Flows
Year Project A Project B
0 -500 -875
1 100 150
2 110 200
3 120 250
4 175 375
5 240 530
6 300 680
a. If you were told that each project’s cost of capital was 12%, which project should be selected using the NPV criteria?
b. What is the profitability index for each project if the cost of capital is 12%?
c. What is the regular payback period for these two projects?
You are a Financial Planner. Your client Ashwin Aswani aged 37 years and works with an IT company earning Rs 15 lakhs per year. His wife Asha, aged 34 years, is a homemaker. They have one daughter Rimmi aged 5 years. The couple requires your help to make some financial decisions. (You can make any assumptions to further build up your case.)
a. Ashwin wants to buy a Pure Risk Life Insurance cover of Rs 1.5 crore. He is confused whether he should buy a ULIP a Term Plan. Recommend the product best suited for his requirement.
b. Ashwin has expressed his desire to retire by the age of 55. Design a retirement plan for him.
one of your clients wants to apply for a Home Loan in the next 12 to 18 months. In 2020 during the pandemic the client had lost his job and delayed his credit card payments. The client is worried that this may impact his credit score maintained by Credit Bureaus. Suggest a roadmap to your client to improve his credit score.
From the following information, furnished by Ms. Anucampa pertaining to the financial year ended as on 31st march 2021,
Short term capital gains on sale of shares in an Indian company received in Japan
10000
Dividend from a Chinese company received in China
3000
Agricultural income from land in Madhya Pradesh
5000
Dividend from PJV Ltd an Indian Company
4745
Gross Rent from a residential property located at Singapore, later on remitted to the saving account in Bank of Maharashtra, Mumbai using the approved channels
600000
Compute the total income and give reason for considering/ not considering these specific items for the relevant assessment year 2021-22, if she is-
a. Resident and ordinary resident
b. Non resident
Following emoluments are received by Ms Sangeeta during the previous year ended on 31.3.2021
Basic salary 250000
Dearness Allowance 10000
Commission 2500
Entertainment allowance 2000
Medical expenses reimbursed 25000
Professional taxes paid 2000(Rs1000 paid by employer)
Ms. Sangeeta contributes Rs 2000 towards the Recognized Provident Fund
She has no other income.
Compute the income from salary for A.Y 2021-22, and give reasons and explanations wherever required, If Ms. Sangeeta is a Government employee.
Three partners choose to go the start-up way. They run a chain of Pet Spa across Mumbai and Pune. For the accounting year 2022, their business observes increasing prices for materials. Hence, while preparing their financial statements, the three partners had varying objectives behind the method they should adopt for pricing the materials.
Objective I: The partners wished to hypothecate inventory and take a loan. Hence, a higher pricing of ending inventory in the business’ balance sheet would be desirable.
Objective II: The partners would wish to attract lower taxes on the business’ profit and hence a lower profit before tax would be desirable.
Discuss in brief any five material pricing methods that businesses may adopt. Identify the pricing methods that would achieve objectives I and II.
Mr. Sharma, founder of Pioma Plastics desires to increase the profit of the business in the coming year. He calls for a meeting with the managerial-level personnel and explains them that the selling price of their product is based on the prevailing market prices of their competitors. He seeks their advice on whether they should work backward on optimizing their costs by determining a standard cost for each of the components. Explain the process of standard costing to the founder as one of the managerial-level personnel. Would following standard costing help the founder in increasing the profit of the business?
Syarikat Berjaya Emas is a single company in the industry that produces products for which there are no close substitutes. The company maintain its current position of dominance in the market by forming different barriers of entry to prevent new competitors from entering the industry. Besides, the company also use a price discrimination strategy to charge different buyers at different prices for the same product even though the cost is the same.
Assume that you are the decision maker of Syarikat Berjaya Emas. Apply your knowledge in market structure to discuss FOUR major attributes of the market structure which Syarikat Berjaya Emas operates. Relevant examples and explanation for each attribute provided are required to support your answers.
Consider the utility function U (x, y) = 3x2 + 5y with MUx = 6x and MUy = 5 .
Required a) Is the assumption that ‘more is better’ satisfied for both goods?
b) What is MRSx, y for this utility function?
c) What does the MRSx,y tell us?
d) Is the MRSx,y diminishing, constant, or increasing as the consumer substitutes x for y along an indifference curve? why
e) Will the indifference curves corresponding to this utility function be convex to the origin (bowed toward the origin), concave to the origin (bowed away), or straight lines? Explain.
