KAZT NARUL UNTVERSITY

Name Grnish K
keistornhion no. KNU20100000272
Semester

Sulject Eccnomis Ergineens

B.Tech
Depee
Deporhment Metallwrgical and

Matenials pireenig
1 Yo hwe been hird as a finanCial adviss1 to
Michael Joden He hek rceived ho o s
`elect
playing prgessional basketbat andwantk to
he best qler,based on considonbion m o y
e r A is a flOm eer $2m a jea years
e r B s a f11 m on fim Jon yyeas and f7n
n yesr 5 What is youf advice)

Sol W will evaluale based en prsent valu he

ophon which has mae presnt valu Shallbe
accepted
We will Compar he pesent valu efeoch
conknact asuming a irterst,

87147,
Fo 81 Interest Rae
Prresert Velue en A
2 2 2 2 2
(1+ O08) (1too8) (+0o) (1+0on)"(tvos)"
I.951 t 1 5 t 1: 5/0 t147o t I:361

$T.9854
Besert Valu d ofenB

-09) (.o8) (o8) (.08)" (:R)S

Similan
Fer 91. InerstRate
A =$7.7193
P-V e oklen
PV e n B $7 7s92
Po 107 Zntees Rak
PVoenA =7.581
PV eB=$7 5163

Interst Rk
For 11
P.V e eler A =$7.3918

P en B .2566
F 1 2 Interst Rah
Pv. en A $7.2096
PY nS 7.o093
For 131 Zoterest Rase
P.v. e en A$ 7.0345
P.V B 6 7738
Fon 14 Lnteest kRat
6:8662
P.v A$
6-5493
Rv 8 B$6
 Conclusion Jabk
Tnherest Rat Pv a .] Pvna (m)My Choise
8 1.9854 8-0762 B
7.7793 7.4392 B
7 5816 $ 7-5163 A

7 . 3918 7-2566 A

12/ 7.209 $ 7.0093 A

$T0345 %.1-38 A

$6%662 6-5493 A

As 6 he PV 7 mgjani t h interestrars is
higher in Case e fen A in Comprison de that

B
Thenelere I will prlern een A nather than B

2y A monuochuren makes ard SMs dobes ,lomps ord

chais h e cost acounkiog dendmen ond he
Sales deponhrent have sinpi Suppled he fsllosing daa
Produck Seling vie Vaniabk cost prie upre Sales
Volum
Ponunil(RS) Pen unit(RS)
Jabk 20 5 20
Lomp 25 20 30
Chain 35 25 SO
Capaue efim > R 3ogp00 t a l Sales Value
 Arnnual ixed CGost > Rs 20,0oo
Calcutahe (1}BEP ond(2) Pnll i m woks is a

8o Copei
ol he conibudion Jawads ixed cos in each cag s

Table Rs 5
Lombs Rs 5
Chains Rs 1o

Now hese Contnibuhons oe to be Converkd into

ercentge Sellig me, hedemula is

D
Contribuion = Selliog Price - vániabe cosx 100
Selling Brie

Thu's the Contribution lon individual iems is

Tabe 20 -15 x 00 25
20

Lamb 25-20 x100 20

25

35-25 x100 = 29-57

Chain
35

Now, we mulihly hx caibution encanaye q eoch

the product y pencendoge Saes velume Jon ha) parnheiuler
pitckct ord add thedipwr ond igives the total Conkribuk'on
pen nutee et sales volume fon oble, Jamps andchaurs
 Pa-5
Conbibkio npee Sales
Jrbles 25x 20Y 5
Lamps 20x 30 6

chairs 28.57 x 50 4 28)

Toalnbee ol Saley 25.29

25
This 25 sthe whel contribuhiom pen upee wnall
Sales iven e prrser product sSales

(1) Break En in(BEP)

Ihe BEP hr Jim may new be alcuhrd as urden
BEP Fixrd Cost
Conkribhon) (Jotal)
20000 x l0o
25
8 0 000

i) Prioit / Loss Calulatim prefil o loss at

Capoci he pnalid nloss wiul be calculaled a

Prolil Jotal nevenut - Jotal Cost

90 e/ 300,000 - F k r d cos - vaniabk cas

2 4oo0o-2o00o 5/ 30o,ooo
 240,ood -
20,000 -2 25, o00

=-50oo (loss
Negalie sign is ymbolising hat there isa loss
.Loss= Rs 5boo

3Considen dhe Jollowing data e combaro

a e
e r 197
Sakes= R120,00o
Fixed cost Rs 25, o00
=

Vaniable Cos Rs 45,000

Find the tollowing
(a) Cotiibution
(6 Pnol
C)BEPP

() Margin *tÝ
Sol niven that
Sales Rs l20,000
Fixed Cos= Rs 25,000
Varviabe cost = R 5,000

(a) Contoibuhion = Sates Varabe Cos

Rs 120000 -

Rs 45m
= Rs 15000
(bBrolit = Conhibuion -Fieed Cost
Rs 75,000 Rs 25,000

5o, 5o,ooo

(C) B7eak Even Point (BEP) =Fixed Cost

P/Vtabi'
P/Vnaho Contibuon
Sales
45 o0 x /00
120 00o

62. 50
B.E.P Fixrd cost
P/V mako

25000 x Jo0
C2-50

=Rs4Oo00
Brol't
Prabo
Soo00 x lod
62-50

Rs So,o00
 -8

4Calcudak he hernaf Rate Rehon f an investmnent of

Rs 10oo wheh ields the yolloig ah lous

Yeo Cash Tnllos

30,000

Ho,000
3 o,000
30,00O

5 20, o00

S"IRR = L t
NN x (-L)
N-Nu

whee,
L Lowen Kae
HE Hihen Rase
N = Nes- BresentValus atlowen s1ak
Na =
Net presenk valur at hahor nake
Yean Cash Inlous| Disount Focle Pnesanbvalue DiscoundFacdo"| RreSpr V'alu
lo7.4 @12CH)
36,000 1 136oo0 1 (136o0o)
30,000 o.909 21270 O 893 26190
1

2 HO,000 026 33 oyo 3/8So

3 60,O00 O451 5 6o F12 L42720

30, 000 O683 20 490 636 190 80
20,000 O 621 12.y20 |1134o
567

N-228o| 4190
 -9
IRR -2280 x(12-10)
2280 4IGo

lO+ 2290 X2
64 7o

l + 0.4o
l o 7o7
5 Pn Indushy is considering invaskmonk in a p

which cost Rs 6,00,000 Cash inlous ae

Rs 120,0oo ; Rs 1.40, o00; Rs 189000 Rs 2,00,000;

Rs 2,50,0ooCalculate Back Parico

Se Years Cash Elous Cumulakive Cash Elows

(6 oocoo) (6o000o)
120o0O (49oooo
2 (340000)
3 8oo00O (16 o00o)
20000o HooocO
5 2500oo

Pay bock Peniod Inikal Thvesmest/AnnualCash Zirle

Pbock Peniod= Jimt to wcover inikial investrln
Jn this broblern
3years # 160ood
Payback peniod= 2 00 o0 o

(3t 0.8)ens
3.9yeans