St.

Thomas College of Engineering & Technology

Kozhuvalloor
Department of Electrical & Electronics Engineering
HS 200 Business Economics
Time: 2 Hrs Series Exam – II Max. Marks 60

PART-A
(Answer any 3 Questions)

1. a) A company is considering two projects A and B, each of them requires an initial

investment of Rs.50 million. The expected cash inflows (in million) from these projects are

Year Project A Project B

1 11 38
2 19 22
3 32 18
4 37 10

If the cost of capital is 10 percent, which project should the firm invest in on the basis of
NPV? (8)

b) What is the main difference between discounted and non discounted cash flow methods
in capital budgeting? (2)

2. a) Explain the IRR method of project analysis. (5)

b) Explain the profitability index method. (5)

3. a)What are the qualitative techniques of demand forecasting? (5)

b) Explain straight line trend method. (5)

4. a) The following investment projects are available for a company and the initial outlay for
the projects are 50,000 each. Calculate payback period for the projects and suggest the most
suitable one. (6)
Year Cash flow
Project A Project B Project C
1 20000 15000 10000
2 15000 10000 15000
3 10000 25000 10000
4 10000 10000 10000
5 10000 5000 15000
 b) Give any two advantages and disadvantages of payback period method? (4)

PART-B
(Answer any 3 Questions)

5. a) A private firm has the following sales pattern during 1995 to 1999 compute demand
forecast for year 2000 and 2001. (8)

Demand
Year (Lakhs)
1995 10
1996 11
1997 11
1998 12
1999 12

b) Differentiate Asset & Liability. (2)

6. a) What are the principles of taxation? (6)

b) Distinguish between direct tax and indirect tax. (4)

7. a) From the following particulars, prepare balance sheet of J&X Ltd as on 31/12/16.
(8)
Particulars Amount
Cash in hand 500000
Building 5000000
Investments 500000
Furniture 400000
Land 600000
Goodwill 40000
Debtors 50000
Prepaid expenses 900000
Cash at bank 100000
Capital 7000000
Net profit. 2000000
Drawings 910000
Closing stock 100000
Interest on capital 100000

b) What are the limitations of a balance sheet? (2)

8. a) What is a balance sheet? (5)

b) What are the steps in capital budgeting? (5)

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