1) Write down different types of economic system.

There are basically three types of economic system. They are market/capitalist economy, controlled/command economy and mixed economy. MARKET ECONOMY/FREE MARKET ECONOMY In market economies, economic decisions are made by individuals. The unfettered interaction of individuals and companies in the marketplace determines how resources are allocated and goods are distributed. Individuals choose how to invest their personal resources what training to pursue, what jobs to take, what goods or services to produce. And individuals decide what to consume. Within a pure market economy the government is entirely absent from economic affairs. Features All the resources in a market economy are privately owned by people and firms. Every business will aim to make as much profit as possible i.e. profit is the main motive. There is consumer sovereignty. Firms will only produce those goods which consumers want and are willing to pay for. Price is determined through the price mechanism

Advantages Market economies respond quickly to peoples wants. Factors of production which are profitable will only be employed. There is wide variety of goods and services in the market.

New and better methods of production are encouraged thus leading to lower cost of goods and services. Disadvantages Public goods may not be provided for in Market economy, thus the government will have to interfere to provide these types of goods. Market economies encourage consumption of harmful goods Prices are determined by the demand and supply of goods.

 Social cost may not be considered while producing goods and services. It may lead to unemployment because machines will be more productive than men.

PLANNED ECONOMY/ COMMAND ECONOMY/COMMAND ECONOMY In a command economic system or planned economy, the government controls the economy. The state decides how to use and distribute resources. The government regulates prices and wages; it may even determine what sorts of work individuals do. Socialism is a type of command economic system. Historically, the government has assumed varying degrees of control over the economy in socialist countries. In some, only major industries have been subjected to government management; in others, the government has exercised far more extensive control over the economy. The classic (failed) example of a command economy was the communist Soviet Union. The collapse of the communist bloc in the late 1980s led to the demise of many command economies around the world; Cuba continues to hold on to its planned economy even today.

Features Government decides how all scarce resources were to be used.

Government will decide what is to be produced, how much to be produced and how much should be charged for goods and services. The economy only has Public Sector.

Advantages There is no competition between firms thus resulting in less wastage. Government ensures that everybody is employed. Less gap between poor and rich.

Disadvantages No incentives for businesses to produce. Production of goods is decided by government thus there is no consumer sovereignty. Businesses usually are less efficient because of lack of profit motive.

MIXED ECONOMY A mixed economic system combines elements of the market and command economy. Many economic decisions are made in the market by individuals. But the government also plays a role in the allocation and distribution of resources. The United States today, like most advanced nations, is a mixed economy. The eternal question for mixed economies is just what the right mix between the public and private sectors of the economy should be.

Features Mixed economy is a combination of market economy as well as government planning. It has both private sector and public sector. Some businesses are owned by private individuals while some businesses are owned by the government. India, Indonesia is examples of mixed economies. Mixed economy attempts to overcome the disadvantages of a market economic system by using government intervention to control or regulate different markets.

2) Write down the advantage and disadvantage of I. II. III. Equivalent worth method IRR method Payback period method

Answer: ADVANTAGES AND DISADVANTAGES OF EQUIVALENT WORTH METHOD Advantages: Useful method to use in respect to long-term lease which generally involve considerable capital outlay Interest on capital investment is taken into account. This method is perceived to the most exact, precise and scientific form from the point of view of calculations.

Disadvantages: Though interest is taken into consideration but the rate is still arbitrary and not based on law Computation using this method becomes more complicated where there are frequent additions, dismantling, etc. taking place. Not so suitable for assets like Plant & Machinery.

Internal rate of return is that method of capital budgeting in which we can calculate IRR and compare it with cut off rate for selecting any project. It has following advantages and disadvantages. First we will discuss the advantages of Internal rate of return (IRR)

ADVANTAGES AND DISADVANTAGES OF IRR METHOD ADVANTAGES 1. Perfect Use of Time Value of Money Theory Time value of money means interest and it should high because we are sacrifice of money for specific time. IRR is nothing but shows high interest rate which we expect from our investment. So, we can say, IRR is the perfect use of time value of money theory. 2. All Cash Flows are Equally Important It is good method of capital budgeting in which we give equal importance to all the cash flows not earlier or later. We just create its relation with different rate and want to know where is present value of cash inflow is equal to present value of cash outflow. 3. Uniform Ranking There is no base for selecting any particular rate in internal rate of return. 4. Maximum profitability of Shareholder If there is only project which we have to select, if we check its IRR and it is higher than its cut off rate, then it will give maximum profitability to shareholder 5. Not Need to Calculate Cost of Capital In this method, we need not to calculate cost of capital because without calculating cost of capital, we can check the profitability capability of any project.

Disadvantages 1. To understand IRR is difficult It is difficult to understand it because many student can not understand why are calculating different rate in it and it becomes more difficult when real value of IRR will be two experimental rate because of not equalize present value of cash inflow with present value of cash outflow. 2. Unrealistic Assumption For calculating IRR we create one assumption. We think that if we invest out money on this IRR, after receiving profit, we can easily reinvest our investments profit on same IRR. We seem to be unrealistic assumption. 3. Not Helpful for comparing two mutually exclusive investments. IRR is not good for comparing two projects. ADVANTAGES AND DISADVANTAGES OF PAYBACK PERIOD METHOD Advantages Of Payback Period (PBP) 1. Payback period is simple and easy to understand and compute. 2. Payback period is universally used and easy to understand. 3. Payback period gives more importance on liquidity for making decision about the investment proposals. 4. Payback period deals with risk. The project with a shortest PBP has less risk than with the project with longest PBP. 5. The short term approach of payback period is an added advantage of calculation of capital expenditure.

Disadvantages of Payback Period (PBP) 1. In the calculation of payback period, time value of money is not recognized. 2. Payback period gives high emphasis on liquidity and ignores profitability. 3. Only cash flow before the payback period is considered. Cash flow occurred after the PBP is not considered.

3) Write about VAT.

(VAT) is a broad-based tax as it also covers the value added to each commodity by a firm during all stages of production and distribution. It is a modern tax system to improve the collection of taxes, to increase efficiency and to lessen tax evasion. It is also regarded as the backbone of income tax system in Nepal.

4) Write about demand analysis and sales forecasting.

DEMAND ANALYSIS Demand is the amount of goods that consumers or buyers are willing and capable to buy at a specific price in a specific time period al else remaining the same. Demand is an economic principle that describes the willingness and desire of consumers to purchase specific goods or services at a specific ceteris paribus. Demand analysis is the deliberate and systematic process of gathering information and data about current and potential visitors for program and administrative decisionmaking; audience inventory and analysis that considers current, hindsight, and future perspectives and employs a thoughtful and deliberate process for understanding and describing patterns in the data for making planning recommendations.

SALES FORECASTING
Sales Forecasting is the process of estimating what your businesss sales are going to be in the future.

The sales forecast is a prediction of a business's unit and dollars sales for some future period of time, up to several years or more. These forecasts are generally based primarily on recent sales trends, competitive developments, and economic trends in the industry, region, and/or nation in which the organization conducts business. Sales forecasting is management's primary tool for predicting the volume of attainable sales.