Dhaka City College

Department of Finance & Banking

1st Semester Final Exam-2016
MBA Part-II
Exam Date: 03.09.2016
Course: Project Appraisal & Management
Full Marks: 50

Time: 2 Hour 30 minutes

Part A
Briefly answer any eight (8) from the following questions:

8*1 = 08

1. a. What is project?
b. What is product mix?
c. What is price elasticity of demand?
d. What is nature of project?
e. What is exponential smoothing method?
f. What is economies of scale?
g. Define factory overheads.
h. What is corporate appraisal?
i. Define project appraisal.
j. What is financial risk?

Part B
Shortly answer any three (3) from the following questions

3*4 = 12

2. From the following information calculate income elasticity of demand and price elasticity of demand:
Q1 = 100,000, Q2 = 95,000, P1 = Tk. 40, P2 = Tk. 50, I1 = 1,000, I2 = 1,200.
3. Describe experience curve with example.
4. From the following time series information forecast moving average for period 5, 6, 7 and 8 using a 4-period
moving average:
Year
Sales (in Million
Year
Sales (in Million
Year
Sales (in Million
Tk.)
Tk.)
Tk.)
2001
28.0
2005
34.2
2009
31.9
2002
29.0
2006
32.7
2010
34.3
2003
28.5
2007
33.5
2011
35.2
2004
31.0
2008
31.8
2012
36.0
5. Describe the important charts and layout drawings.
6. What are the major components of cost of production? Briefly explain.

Part C
Broadly answer any three (3) from the following questions

3*10 = 30

7. What are the different forecasting methods used in demand forecasting? Explain.
8. What factors have a bearing on the plant capacity?
9. Rahim Company is operating on 60% capacity, producing 24,000 units per annum at the following cost price
structure:
Raw Materials
Tk. 5 per unit
wages
3 per unit
Overhead-variable
1 per unit
Fixed
1 per unit
Profit
2 per unit
Price
13 per unit
On 31st December, 2014, the current assets and liabilities were as follows:

Raw materials 4,000 units, at cost

Work-in-process, 1,000 units, at cost
Finished goods 3,000 units, at cost
Sundry debtors
Creditors for goods
liability for wages
liability for expenses

Tk. 20,000
8,000
33,000
78,000
30,000
3,000
6,000

In view of increased demand for the product it has been decided that from 1 st January, 2015, the unit should
operate at 90% capacity. You are required to ascertain the additional working capital as would be necessary in
view of additional production. The prices of materials, rates of wages and expenses and the selling price per unit
will not be changed. The period of credit allowed to customers, credit allowed by suppliers and also time lag in
payment of wages and expenses shall remain the same as before.
10. What key issues would you examine in a preliminary screening exercise?
11. The financial statement of Summit Power Company is appearing below:
Summit Power Company
Balance sheet
December 31, 2015
Particulars
Assets:
Cash
Accounts receivable
Inventories
Plant & equipment
Accumulated depreciation- plant & equipment
Total
Liabilities & stockholders equity:
Accounts payable
Income taxes payable
Bonds payable
Common stock
Retained earnings
Total

2015
Tk. 7,800
5,400
11,400
21,000
(9,000 )
Tk. 36,600

Tk. 3,900
4,200
10,500
23,400
(7,200)
Tl 34,800

Tk. 8,700
4,500
6,000
7,500
9,900
Tk. 36,600

Tk. 9,900
6,000
3,000
7,500
8,400
TK. 34,800

Summit Power Company

Income statement
For the year ended December 31, 2015
Particulars
Tk.
Sales revenue
Cost of goods sold
Gross profit

2014

Tk.
72,000
54,000
18,000

Selling expense
7,200
Administrative expense
3,000
10,200
Income from operation
7,800
Interest expense
600
Income before income tax
7,200
Income tax expense
2,100
Net income
Tk. 5,100
The following additional data were provided:
a. Cash dividend of Tk. 3,600 were declared and paid.
b. During the year equipment was sold for Tk. 3,000 cash. The equipment cost Tk. 4,500 originally and
had a book value of Tk. 3,000 at the time of sale.
c. All depreciation expense is in the selling expense category. All sales and purchase are on account.
d. Additional equipment was purchased for Tk. 2,100 cash.
Requirement: Prepare a statement of cash flow for 2015 using the indirect method.