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Question 1

Financial Planning is paramount for the success of any organization. Discuss the merits of this Statement.

Question 2

What is the importance of Budgeting in the Business world? Discuss the merits and demerits. Also, elaborate on the Budget cycle that an organization needs to follow.

Question 3

If you plan to invest $15,000 annually for 5 years and the discount rate is 15%. Required: i) Calculate what is the future value ?

ii) Briefly explain the time value of money.

Question 4

Prepare a Cash budget for the Quarter April To June based on the following data and additional information.

Month	Sales($)	Purchase($)	Wages($)	Overheads($)
Jan	70,000	38,000	7,000	12,000
Feb	52,000	40,000	8,000	5,500
Mar	59,000	42,000	10,000	13,500
Apr	63,000	44,000	11,500	7,400
May	56,000	46,000	9,000	9,500
Jun	65,000	48,000	8,000	9,000

Additional Information :

1. Cash balance at 1^st April is $720,000
2. Sales is 30% cash sales and 70% is collected in the following month.
3. All purchases of a month are paid after 2 months.
4. Land was purchased in April for $105,000
5. Wages of a month are paid the following month. All overheads are paid the same month.
6. Loan repaid in May $56,000

Question 5

Kwality Industries is considering two projects to develop. The expected cash inflows are as

follows :	Project A	Project B
Year 1	140,000	130,000
Year 2	175,000	250,000
Year 3	135,000	320,000
Year 4	250,000	50,000
Year 5	200,000	170,000

Each Project requires an investment of $750,000. A rate of 10% has been selected for the Net Present Value (NPV) Analysis.

Required :

Calculate through the NPV and the Payback method and suggest which project should be recommended based on each method.

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