Master of Business Administrator (MBA) Examination

III Semester

Project Management

Time : 3 Hours]                                                                                               [Max. Marks : 80

Section A

1.      Establish the need and importance of Project Management. Explain the various phases of Capital Budgeting.

2.      How Market-Demand Analysis for a mast Moving Consumer Goods (FMCG) product is to be done? How does it differ from the product which technically new and introduced first  time in the market ?

3.      Explain the concept of Time Value of Money with suitable examples. Discuss the various non-discounted cash flow methods of appraisal of a project.

4.      Write notes on any two of the following

(a)     Cost of Capital and Appraisal Decision for a Project.

(b)     Investment Strategies.

(c)     Technical Analysis for a Project.

(d)    Analysis of Risk.

Section B

5.      The management of Manmohan Udyog has two alternative project under consideration. Project A requires a capital outlays of Rs. 3,00,000 but Project B needs Rs. 4,20,000. Both are estimated to provide a cash flow for six years : A Rs. 80,000 per year and B. Rs. 1,10,000 per year. The cost of capital is 12% show which of the two projects is preferable from the view point of :

(i)      Net Present Value and

(ii)     Internal Rate of Return.

6.      The activities, duration and direct activity costs of a project are as follows :


                        Time in Weeks                                    Cost (Rs.)       

Activity           Normal            Crash               Normal            Crash

1-2                   6                      3                      40,000             70,000

1-3                   5                      3                      30,000             52,000

2-4                   2                      1                      60.000             84,000

3-4                   10                    6                      70.000             98000

2-5                   3                      2                      45.000             63.000

4-5                   4                      2                      26.000             50.000

The indirect costs are Rs. 11,500 per week.

(a)     What is the minimum time in which this project can be completed? What is the minimum cost at which this can be done ?

(b)     Which activities should be crashed to minimize the total cost ?

7.      A company is to produce three on the same machine using a common cycle policy. What should be the products respective batch sizes and the total annual cost given the following data ?

                                                Product 1        Product 2        Product 3

Production per year (units)     6000                12000              4500

Demand per year (units)         2000                3000                1500

Set up cost                              Rs. 500            Rs. 400            Rs. 600

Inventory carrying cost per                            

Unit per year                           Rs. 400            Rs. 700            Rs. 300


8.      Asian Paints Ltd. Sells its products on a good profit of 20% on sales. The following information is extracted from its annual accounts for the year ending 31st December, 1997


Sales at 3 month credit                                                                       40,00,000

Raw Materials                                                                                     12,00,000

Wages paid —15 days in arrears                                                        9,60,000

Manufacturing expenses —1 month in arrears                                   12,00,000

Administrative expenses —1 month in arrears                                   4,80,000

Sales promotion expenses payable 1/2 year in advance                      2,00,000

Income Tax (payable quarterly last installment falls  

Due in December 97)                                                                          40,0,400

The company enjoys one month's credit from supplier of raw materials and maintain 2 months stock of raw materials and 1 1/2 months stock of finished goods. Cash balance is maintained at Rs. 1,00,000 as a precautionary balance. Assume 10% margin, find out net working capital requirement of the company.