Project Appraisal and Finance ( PAF)

Dayanada Sagar University( DSU)

EMBA IV Trimister

Date of assignment : 6th March 2021

 

1)      HLL Cements has the following capital structure (Rs. In Lakhs)

Particulars

Market Value

Book Value

Cost (%)

Equity Share capital

80

120

18

Preference shares

30

20

15

Fully Secured debentures

40

40

14

As a Project and finance manager you are required to compute average cost of capital. Cost of individual sources of capital is net of tax.

 

 

2)      KLM limited is considering the following investment projects

Projects

Cash flows

CF at year 0

CF at year 1

CF at year 2

CF at year 3

A

(10,000)

10,000

 

 

B

(10,000)

7,500

7,500

 

C

(10,000)

2,000

4,000

12,000

D

(10,000)

10,000

3,000

3,000

 

a)      Rank the projects according to each of following methods (i) Payback (ii) Accounting rate of returns (iii) Internal rate of returns  IRR (iv) NPV Assuming discount rate of return at 10% and 30%

b)      Assuming projects are independent which one should be accepted? If projects are mutually exclusive which project would be recommend

3)      What are the process of capital budgeting? Explain briefly.

4)      Briefly Explain strategy and various forms of Grand Strategy and how this will impact the capital budgeting