Ktu(®) bank
F F4860 Pages: 2

given in Rs.000, crores).
b) Whatare the difficulties in the measurement of national income. (4)
PART C
Answer any four questions, each carries 10 marks.
9 2) Suppose the initial investment on a project is estimated as 25000 and the cost of capital (6)

is 10 per cent. Estimate the NPV of the future cash flows after tax given below and state
weather the project will be accepted or not.

Year 1 2 3 4 5
Cash flows 9000 8000 7000 6000 5000
b) Give any two merits and limitations of NPV method. (4)

10 a) Suppose an investor wants to decide whether to build a small facility, medium facility or (6)
large facility in a situation of uncertainty . The payoff table (in $ 000) of the project is
given below. Which alternative will be selected according to Maximin, Maximax and
Laplace principles. State clearly the reason for each selection.
Possible future demand

Alternatives [0४ நம்மா 1180
Small facility 8 8 8
Medium facility 6 10 11
Large facility 1 3 14
b) What do you mean by arisky situation in business? How is decision taken under (4)
risk?
11 What is cost benefit analysis? Give any two limitations of cost-benefit analysis. (10)
12 a) Distinguish between foreign direct investment and foreign portfolio investment. (5)
b) Give any three disadvantages of foreign investment. (3)
c) What do you mean by current liabilities in a balance sheet? (2)
13 The data given below shows the sales of cars in a showroom from 2012 to 2016. (10)
Develop a trend equation and predict the sales for the years 2017 and 2018.
Year 2012 2013 2014 2015 2016
Sale 85 92 89 105 108
14. a) What is a money market? Give any four functions of money market. (6)
b) What is GST? (4)
೫ ೫ ಸೇ ೫
Page 2 of 2

1೭310811