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'SCHOOL OF DISTANCE EDUCATIOl\t:
EXAMINATIONS - DEC~MBER 201:6

NCP291 tOM 12/PGPM f~l PGM .241p.GPlvrg4/lDM '241

GPBM 141 C;;PPM24/GPQS 241 PGBM24tPGQS 24:
Construction Fin~nceManagement
Note: L Answer ANY FIVE questions.
- . 2-. 'AU 'questi9rls carry c8qualmarks.
3.' Be' precise and state your' as~umptions ifany.

Time allowed: 2 hours .Max' Marks: 100

1. What is the economics of construction industry? How does financial

managementhelp us to manageconstruction industry?

2. _~. Exp!~l~~~}o how the wealth ma~ir:!'i~~.!ioll,~~~!!Y~is,slu?eri~_~he, profit

maximization'. _
B. Inter-relationshipbetween investment, financing and dividend.decisions.

3. Explainthe concept of project and describethe varicus sources to finance the

project.

4. Write short note on B.O.T. project.

5. Write short note on risk in international contract;

6. A. What are the different methods to ascertain the profit incase of incomplete
contract.
B. The following was the expenditure .. on a contract for Rs 12,00,000
commencedin April, 1990
(Rs.)
Material 2,40,000
Wages 3,28,800
Plant 40,000
Businesscharges 17,200
Cash received on account up to 31st March, 1991 amounted to Rs. 4,80,000
being 80% of work certified; the value of materialson hand at 3pt March, 1991

(P.T.D)
' ..

was Rs. 20000. Prepare an account showing the position at the end ofthe year
and the proportion of the profit which might reasonably be taken to Profitand
Loss Account after 10 per cent depreciation em plant.

7. A company wcl"t~.to replace its old rnachjrw with a new automatic machine.
Two models A and B are available at th~ same cost of Rs.5 lakhs each. Salvage
value of the old machine is R~.1 lakll. The utilities of the existing machine can
be used if the company purchases 1T10del, 'Ai additional cost of utilities to be
purchased in that ease are Rs.1 lakh, If the company purchases model 8, then
all existing utilities will have to. be replaced with new utilities costlnq Rs.2 lakhs.
The salvage value ofold utilities will be Rs.0.20 lakhs, ""hecash inflows are
expected to be as follows:

(Cashinflows) (Cash inflows)

Year/Model A B P.V. Factor
Rs. Rs. @15%
1. 1,00,000 2,00,000 0.87
2. 1,50,000 2,10,000 0.76
3. 1,80,000 1;80,000 0.66
4. 2,00,000 1,70,000 0.57
5. 1,70,000 40,000 0.50
Salvagevalueat the end of Year5 50,000 60,000

The target , return on the capital is 1 5 % you a,re,

',.' .",:,'"
required tp,:
,

'Ta[Cpmpute, for the two machtnes-separatelv.: net present value, discounted

~-.
. paybcickperiod and desirab,UitY'fClptotantf:'..... t ,.,'
(b) Advise which 'of
the machines isto be selected?

8. (a) Compute return on capital employed from the following details:

Net profit after tax 43,000

Rate of Income tax 50%
14 % Debentures 1,00,000
Share Capital 2,50,000
Profit and loss ale 1,58,000
Loss on issue of debentures 8,000

(b)An investment of Rs. 2, 72,000 yields the following cash inflows. Determine
internal rate of return.

Year Rs.
1 60,000
2 80,000
3 ',20,000
4 60,000
5 40,000