An M&A expert has been hired to explain to the management of a sick company

16 Sep

Strategic Cost Management

1. XYZ is considering a Project with an initial investment of Rs.100,000. Three probable cash flow scenarios with their probabilities of occurrence are as under:
Annual Cash Flow (Rs.)
Project life is 5 years with expected return of 20%. The expected terminal values associated with each of above probabilities are Rs.0, Rs.20,000 & Rs.30,000. Find the probable NPV.
2. An M&A expert has been hired to explain to the management of a sick company the symptoms that are normally seen before a company qualifies for being referred to as a BFIR candidate. You being a freshly appointed Management Trainee are required to present a small write up, briefly explaining those early symptoms.
3. a) From the following particulars, calculate: Material Cost Variance & Material Price Variance
Quantity of materials purchased
3000 units
Value of materials purchased
Standard quantity of materials required per tonne of output
30 units
Standard rate of material
Rs.2.5 per unit
Opening stock of materials
Closing stock of materials
500 units
Output during the period
80 tonnes
3. b) Calculate Labour Yield Variance from the following data:
Standard Output
500 units
Actual Output
450 units
Standard Time
1000 hrs
Standard Rate
Rs.20 per hour

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