AprilMay 2023 NM unique assignments The Jubilant Food wor

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Financial Management

1. The Jubilant Food works Ltd. has two alternative proposals under consideration. Project Vadapav requires a capital outlay of Rs. 24, 00,000 and project Misalpav requires Rs. 36, 00,000. Both are estimated to provide a cash flow for five years:

Project A Rs. 8,00,000 per year and Project B Rs. 11,60,000 per year. The cost of capital is 12%. Show which of the two projects is preferable from the view point of
a. Net present value method

b. Profitability Index (10 Marks)

2. From the given below calculate Weighted Average Cost of Capital. (10 Marks)

Cost of Debt 12%
Tax Rate 30%
Amount of Debt Outstanding Rs.2500 lakh
Risk-free Rate of Return 6%
Required Return of the Market 14%
Stock Price Rs.50
Shares Outstanding 100 lakh
Beta 1.5

3. From the given below calculate the present value of future cashflows.

a. What amount you will receive today, if I give you 15000 after 3 years, interest rate is 8%. (5 Marks)

b. What amount you will receive today, if I give you 25000 after 5 years, interest rate is 15%. (5 Marks)
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