P Ltd. is considering a new project with the following details: Initial project cost 4,80,000 Annual projected sales 4,00,000 Annual projected…

CA Final · Advanced Financial Management · PYQS · September 2025
P Ltd. is considering a new project with the following details: Initial project cost 4,80,000 Annual projected sales 4,00,000 Annual projected variable cost 1,60,000 Annual projected fixed cost 60,000 Project life 4 years Cost of capital 10% p.a. Consider Cumm. PVF for 4 years @ 10% = 3.169 and @ 11% = 3.103 Note: (a) Ignore depreciation on initial project cost and taxation. (b) Calculation up to 2 decimal places. From the information given above, choose the correct answer to the following question No. 1 to 3:
(A) 42.42%
(B) 52.80%
(C) 53.09%
(D) 63.09%

Suggested Answer and Working Notes:

Correct Answer: Option (C)

53.09%

Topics: Interest Rate Risk Management, Advanced Capital Budgeting Decisions

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