10

11

12

13

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b)
a)
b)

a)
b)

a)
b)

a)
b)

a)
b)

a)
b)

a)
b)

R3900

your view.
Define GNP, NNP, NI, PI and DPI.
Examine the various functions of the Reserve Bank of India.

Pages: 2

(5)
(5)

A mobile manufacturing company makes Rs.100000 every day by selling them. (5)

During this time, the machinery of the company depreciates by 10000. The

company pays GST of Rs.6000, gives the owner Rs. 40000 and retains Rs. 44000

for its expansion activities. The owner pays Rs. 45000 as income tax from his

income. Compute the firm’s contribution to the following measures of national
income. (i) GDP (ii) NDP (iii) NI (iv) Personal income (v) Disposable Personal

income.
PART C
Answer any four questions, each carries10 marks.
What is Capital budgeting?

(4)

The following table gives the annual sales and cost for two machines, which a_ (6)
company is planning to purchase. Machine A costs 2,60,000 while machine B

costs Rs. 90,000.

1,70,000 1,70,000
Raw Materials 60,000 60,000
Labour 15,000 60,000

30,000 20,000

Use the payback method to determine which machine the company should buy?

Define payback period and average rate of return.
Examine the various sources of capital for a business firm.

(4)
(6)

What is cost benefit analysis? Mention the difficulties encountered while (4)

carrying out this analysis.

A project has been started by a company with an initial investment of Rs.10, (6)
00,000. The company gets a cash inflow of Rs. 2,00,000 in year 1, Rs. 2,00,000
in year 2, Rs.3,00,000 in year 3, Rs.2,00,000 in year 4, and Rs. 3,50,000 in year
5. The cost of capital for the firm is 10 percent. Use the NPV method to

determine whether the company should go ahead with the project.
What is the balance sheet? Distinguish between assets and liabilities.

(5)

What is the money market? What are the various instruments in the money (5)

market?

Mention the canons of taxation.

. The following table gives the demand of a company for five years. Use
trend method to project the demand for the years of 2018, 2019 and 2020.

Year Demand

What are the major techniques used in forecasting?

What is FII? Mention its disadvantages.
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