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Tuesday, May 7, 2013

Attention: Pattoki Students


Published On:  Tuesday, May 07, 2013

Spring 2013 Mid Term examinations for Pattoki students are being planned at C-Block, Ravi Campus, University of Veterinary and Animal Sciences (UVAS) Pattoki. All Pattoki students, who wish to appear in the upcoming exams at this center must request via email at datesheet@vu.edu.pk on or before 10-May-2013.


    
            

Attention Overseas Students: EXAM SOFTWARE INSTALLATION AND CONFIGURATION (SPRING 2013 MID TERM)


Published On:  Tuesday, May 07, 2013
Overseas Exam Software and related material has been made available for download. Please make sure to install latest exam application available on the link given below. You must follow the sequence of instructions given below for smooth and error free installation:
INSTRUCTIONS
1.   Visit the link http://qb.vu.edu.pk
2.   For downloading, login with your VULMS student ID and password
3.   Download all material one by one
4.   After installation, you must go through the “User Manual” for attempting your paper.
5.   An icon will be visible on your desktop. Please double click the icon to run the demo test. You may test your installation by joining each of the following sessions till May 23, 2013 during the specified timings)
Session 1:      09:00 AM   to   10:00 AM         Pakistan Standard Time
Session 2:      11:00 AM   to   12:00 PM         Pakistan Standard Time
Session 3:      02:00 PM   to    03:00 PM         Pakistan Standard Time
Session 4:      03:30 PM   to    04:30 PM         Pakistan Standard Time

Session 5:      05:00 PM   to    06:00 PM         Pakistan Standard Time
6.   Please use your student ID as login and password for login the exam application to check demo test. For example
Student ID:  mc090XXXXXX    (Yours student ID)
Password:   mc090XXXXXX    (Yours student ID)
7.   After completing the demo test, you must confirm your installation status by clicking the link “Click here to confirm your installation status” given on http://qb.vu.edu.pk
In case of any query/problem, you may give your feedback to overseasexams@vu.edu.pk  or contact us on the following numbers during VU office hours i.e. 09:00AM-05:00PM (PST)
Note: There is no invigilator during the demo sessions, so no need to reply the messages during demo. You have to send us your feedback at overseasexams@vu.edu.pk or you may also contact “overseasexams” and “overseasexams02” at Skype during demo sessions for support.

+92-42-99204760, +92-42-99203899, +923200460004, +923200460007


                         

MGT201 Assignment no 1 Solution 06-05-2013



MGT201 
Assignment no 1 


PROBLEM:


SNT Company is considering purchase of a new plant and machinery to supplement its manufacturing process. It has been anticipated that the new plant and machinery will involve an immediate cash investment of Rs. 500,000 and Rs. 800,000 in year 1. The after-tax cash inflows will be Rs. 150,000, Rs. 200,000 and Rs. 250,000 for year 2, 3 and 4 respectively. Afterwards, there will be a cash inflow of Rs. 300,000 each year from year 5 to year 10. Though the plant might be viable after 10 years but the company prefers to be conservative and end all calculations at that time. The company’s required rate of return is 14 percent. Considering yourself as financial analyst of the company, you are required to make the following calculations along with interpretations:
a)  What is the project’s payback period? Comment on the feasibility of project by considering

that firm’s required payback period is 5 years.   (3+1 Marks)

b)  What is the net present value of the project? Is it acceptable?           (5+1 Marks)

c)  What is the internal rate of return for the project? Is it acceptable? Support your decision with conceptual rationale            (8+2 Marks) NOTE: You are required to use the Interpolation Formula or Technique for calculating IRR; consult the relevant power point slideshow uploaded in the lesson contents of Lesson # 9. The slideshow can be accessed by using the following path:


Sign in to VULMS   Course Website   Lessons   Lesson 9   Resource Material

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SOLUTION IDEA


a)            Calculation of payback period.
Year
Cash flows
Commutative cash flows
0
-50000

1
-800000

2
150000
1500000
3
200000
350000
4
250000
600000
5
300000
900000
6
300000
1200000
7
300000
1500000
8
300000
1800000
9
300000
2100000
10
30000
2400000

                          
Payback period= 6 + 100000/300000
                         = 6.33 years
This project is not feasible because its payback period is greater than firm’s required payback period.


b) Calculation of NET PRESENT VALUE

Year
Cash flow
Cum cash flow
PV @14%
Present value
0
(500000)

1.00
(500000)
1
(800000)

0.877
(701600)
2
150000
150000
0.769
115350
3
200000
350000
0.675
135000
4
250000
600000
0.592
148000
5-10
300000
240000
2.304
691200
                                                                                        Net present value (-112050)

NPV is negative so project is not acceptable

C ) What is the internal rate of return for the project? Is it acceptable? Support your decision with conceptual rationale

Years
Cash flows
PV @ 11% discount
PV @ 10% discount
0
-500000


1
-800000


2
150000
121743.37
123966.94
3
200000
146238.27
150262.96
4
250000
164682.74
170753.36
5
300000
178035.39
186276.39
6
300000
160392.25
169342.17
7
300000
144497.52
153947.43
8
300000
130177.94
139952.2
9
300000
117277.43
127992.28
10
300000
105655.34
115662.986


 NPV @ 11% discount = -31299.75
 NPV @ 10% discount = 37393.7
IRR= Lower discount rate+ Difference of discount rates (NPV at lower discount rate/NPV at lower discount rates- NPV at higher discount rate
IRR= 11+1(37393.7/37397.3+31299.75)
IRR=11+ (0.5443)
IRR=11.54%

Because the internal rate of return is less than the required rate of return the project would not be acceptable.


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