IAE 2

Q.No Questions 1. Emphasize the different types of value. 2. Accentuate the various functions of a product? 3. Enumerate revenue dominated cash flow. 4. List the bases for comparing the worthiness of the projects. 5. Characterize the term rate of return. 6. Specify some application areas of Value Engineering 7. Inscribe any four objectives of value analysis. 8. (a) Explain the various Interest rate formulas with suitable examples. (b) There are three alternatives available to meet the demand of a particular product. They are as follows: (a) Manufacturing the product by using process A (b) Manufacturing the product by using process B (c) Buying the product The details are as given in the following table: The annual demand of the product is 8,000 units. Should the company make the product using process A or Process B or buy it? 9. (a) A Company is planning to purchase an advanced machine centre. Three original manufactures have responded to its tender whose particulars are tabulated as follows Manufacturer Down payment Yearly annual installment No.of installments 1 5,00,000 2,00,000 15 2 4,00,000 3,00,000 15 3 6,00,000 1,50,000 15 Determine the best alternative based on the annual equivalent method by assuming i = 20% compounded annually (b) A firm has identified three mutually exclusive investment proposals whose details are given below. The life of all three alternatives is estimated to be five years with negligible salvage value. The minimum attractive rate of return for the firm is 12% Alternative A1 A2 A3 Investment 1,50,000 2,10,000 2,55,000 Annual net income 45,570 58,260 69,000 Find the best alternative based on the rate of return method of comparison 10. (a) (i) Investment proposals A and B have the net cash flows as follows Proposal End of Years 0 1 2 3 4 A(Rs) -10,000 3,000 3,000 7,000 6,000 B(Rs) -10,000 6,000 6,000 3,000 3,000 Compare the present worth of A with that of B at i=18%. Which proposal should be selected? (a) (ii) Consider the following two mutually exclusive alternatives: Alternative End of Years 0 1 2 3 4 A(Rs) -50,00,000 20,00,000 20,00,000 20,00,000 20,00,000 B(Rs) -45,00,000 18,00,000 18,00,000 18,00,000 18,00,000 at i = 18%, select the best alternative based on future worth method of comparison. (b) (i) Restate the revenue dominated and cost dominated cash flow with the aid of cash flow diagrams and real time examples (b) (ii) A person is planning a new business. The initial outlay and cash flow pattern for the new business are as listed below. The expected life of the business is five years. Find the rate of return for the new business.