FINANCIAL MANAGEMENT

ACTIVITY 6 : CASE STUDY

Question 1: Should the company expand its capacity? Show the
computation of NPV

Ques 1
Cash
Year Flows PV of Cash Flows
0 -250 -250
1 45 39.47
2 45 34.63
3 4 30.37
4 68 40.26
5 68 35.32
6 68 30.98
7 68 27.18
8 68 23.84
9 30 9.23
10 85 22.93
NPV 44.20
Yes the company should expand

QUESTION 2: What is the minimum amount of savings from the

replacement that would justify tile expenditure?

QUESTION 2
CASH OUTFLOW 50
YEARS 10
ANNUAL SAVINGS 9.59

QUESTION 3: What is the annual instalment of the SBI Joan?

QUESTION 3

LOAN 200

RATE 14%

YEARS 10

ANNUAL INSTALMENTS Rs. -38.34

QUESTION 4: What is the amount of the single payment of interest
and principal to SBI after 10 years?
QUESTION 4 LOAN 200
RATE 14%
YEARS 10
REPAYMENT Rs. -741.44

QUESTION 5: Calculate the quarterly instalments of the financial

institution loan?
QUESTION 5
LOAN 200
RATE 3.38%
QUARTERS 40
QUATERLY INSTALMENT Rs. -9.81

QUESTION 6: Should the company borrow from the SBI or the

financial institution? Give reasons for your choice
QUESTION 6 SBI FI
ANNUAL PAYMENT Rs. -38.34 Rs. -36.74
Choosen

QUESTION 7: Would you recommend borrowing from the financial

institution or get the equipment on lease? Show necessary
calculations
QUESTION 7
LEASE RENTAL 52
YEARS 10
PV OF OUTFLOWS Rs. -271.24
High payment go for FI
Loan
Submitted by:

SOMYA SEFALIKA

2023PBA9266

MBA – 2ND SEMESTER