Max Marks: 40 ‘Time: 2 hours: Answer any four questions. All questions carry equal marks. {Students are allowed to use Excel for calculations.) year et be. payable at the beginnin basis over two years ti 10,00,000 at the end of project. The through GDR issue in Maunitius. Each ‘company a3 underlying security which are current Value = Rs 10) in the domestic mark: percent of wssue size. (Ihe 1 ee ecea ina government wants to sign @ loan with the World Bank for Pee Dmlion forinvestimentin the health care seo, There re various options for Investment in @ new urban hospital in the capital in an urban area, which is relatively wealthy compared to rural areas of the country, but where the Population is increasing by 5% per annum through in-migration, }. The constuction of three smaller rural hospitals in each of three poorer rural regions of the country. Toial investment to be directed to an extensive system of rural clinics in all the rural provinces of the country i Each of these options brings different levels of benefits. What criteria would you apy ply to each of these options to choose an optimal project in terms of addressing, poverty and targeting the poorest income groups? 2. XYZ Lid, an Indian company is planning to make an investment through a wholly owned subsidiary in a software project in China with a shelf life of two years. The inflation in China is estimated as 8 percent. Operating cash flows are received at the For the project an initia investment ‘of Chinese Yuan (CN¥) 60,00,000 will |. The land will be sold after the completion of project at estimated value of CN¥ 70,00,000. The project also requires an office complex at cost ‘of CN¥ 30,00,000 ing of project. The complex will be depreciated on strai 0 a zero salvage value. This complex is expected t0 fi ‘ompany is planning to raise the required funds GDR will have 5 common equity shares of the ly trading at Rs 200 per share (Face et. The company his currently paid the dividend, 25% which is expected to grow at 10% p.a. The total issue cost is estimated to be | Is ey 20,000 units at the rate of EN¥ 700 per unit)Th ‘of unit is expected eof: Variable 5 sroent of sales. Fixed operating costs will for income and capital gain is 20 perce fear and expected to rise at the rate of inflation. The tax rate applicable in China int and as per GOI Policy no further tax shall bepayable in India. The cur in India and China is 12! pot rate of CNV i Rus 12.50, The normed bnteront tts ‘and 10% respectively and the tmernatienal parity conditions hold, You are 1eq ) Identify expected fuaute cash frws in Hite ‘and determine NPV of the project in CNY. (B) Dateumine whether R77, Ll decode os, for the projector not assuring Mat neither there is restriction on the wanster of huge from China to India nor any charges/taxes payable on the transfer of funds (My are Public-Private partnerships formed? at PPP projecys have « better chance of success as opposed to purely public or private projects? AVhich forms of PPPs are more popular in India? What, according to you, are the reasons for the sarne? 4. A project for manufacturing a product which is currently being imported im the counsry is being appraised. The project would have a life of 20 years and it will leach tg-fport substitution. The capital outlay on the project is expected to be as follows ae. __ks million Imported Equipment (CIF value: R§9 million) Indigenous Equipment (CIF value: Rs 60 million) | ‘Transport | Engineering and know-how fees eee Pre-operative expenses Bank charges The above costs are financial costs whose social costs will have to be arrived at. The working capital requirement of the project consisting only of domestic raw materials will be Rs 25 million (CIF value: Rs 20 million) which will be recovered at the end of the project life The estimated annual profitability of the project is as follows: Rs million Revenue ~| Sales revenue (Cl f the output Expenses Raw materials and stores (indigenous) Labour Salaries Repairs & Maintenance Depreciation Other overheads pace) Profit Taxable Profit ss We_m apital costs are incurred at the beginning of Year 1 and production begins from Year 1 sell — ee