Financial Management Study Material

1
Financial management

2
Table of Contents
Question 1........................................................................................................................................3
Question 2........................................................................................................................................4
Question 3........................................................................................................................................4
Question 4........................................................................................................................................5
Question 5........................................................................................................................................6

3
Question 1
Initial investment
Particulars Amount
Still price 600000
+ Cost of
transportation
60000
+ Cost of
installation
40000
+ Working capital 30000
Initial outlay 730000
Particula
rs
1 2 3 4 5 6 7 8 9 10 To
tal
Revenue 120000 12000
0
1200
00
120
000
12000
0
120
000
120
000
120
000
120
000
120
000
Cost 20000 20000 2000
0
200
00
20000 200
00
200
00
200
00
200
00
200
00
Depreciati
on
118000 11800
0
1180
00
118
000
11800
0
Net profit -18000 -
18000
-
1800
0
-
180
00
-
18000
100
000
100
000
100
000
100
000
100
000
Tax @
30%
-5400 -5400 -
5400
-
540
0
-5400 300
00
300
00
300
00
300
00
300
00
NPAT -12600 -
12600
-
1260
0
-
126
00
-
12600
700
00
700
00
700
00
700
00
700
00
Depreciati
on
118000 11800
0
1180
00
118
000
11800
0
Residual
value of
an asset
100
00
Recovery of
Working capital
300
00
Cash
flows
105400 10540
0
1054
00
105
400
10540
0
700
00
700
00
700
00
700
00
110
000
PVF @
10%
0.909 0.826 0.75
1
0.68
3
0.621 0.56
4
0.51
3
0.46
7
0.42
4
0.38
6
PV of 95818.
18182
87107
.438
7918
8.58
719
89.6
65445
.107
395
13.2
359
21.1
326
55.5
296
86.8
424
09.8
579
735