Class 12 Finance Capital Investment Decision Notes and Important Questions
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Important Questions
Following are the two alternative proposals are given:
Year | Cash Flow | Project A (Rs.) | Project B (Rs.) |
|---|---|---|---|
0 | Initial Investment (NCO) | (3,00,000) | (5,00,000) |
1 | Cash Flow After Tax (CFAT) | 0 | 1,50,000 |
2 | Cash Flow After Tax (CFAT) | 0 | 1,50,000 |
3 | Cash Flow After Tax (CFAT) | 2,00,000 | 1,50,000 |
4 | Cash Flow After Tax (CFAT) | 80,000 | 1,50,000 |
5 | Cash Flow After Tax (CFAT) | 2,20,000 | 1,50,000 |
Minimum rate of return: 10%
Required:
a) Net present value of Project A
b) Net present value of Project B
Following informations are given as:
Year | Cash Flow | Project A (Rs.) | Project B (Rs.) |
|---|---|---|---|
0 | NCO | (4,00,000) | (4,00,000) |
1 | CFAT | 1,50,000 | 1,64,000 |
2 | CFAT | 1,80,000 | 1,64,000 |
3 | CFAT | 1,90,000 | 1,64,000 |
4 | CFAT | 2,00,000 | 1,64,000 |
5 | CFAT | 1,00,000 | 1,64,000 |
Other Information:
i) Required rate of return: 12%
Required:
a) Find the net present value of both projects. [4+2]
b) Which project is more profitable? Why? [1+1]
Explain any five types of investment proposals.
Describe the steps involved in the evaluation of an investment.
What is investment decision?
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Exam
Past Question Analysis
Historical exam-pattern data from past NEB question papers — not a prediction of future questions.
5
Question Items
27
Total Marks
3
Papers Appeared In
| Year | Question Items | Marks |
|---|---|---|
| 2083 | 1 | 8 |
| 2082 | 3 | 14 |
| 2081 | 1 | 5 |
This page covers Capital Investment Decision, chapter 7 of 10 in the Class 12 Finance syllabus set by the National Examination Board (NEB). 5 important questions for this chapter are available, each with a model answer.
For subjects like this one, examiners tend to reuse similar question patterns year to year — comparing this chapter's important questions against recent old NEB papers is one of the more efficient ways to revise.