CSS Solved Business Administration Past Papers | Tiger Corporation is considering to invest in a given project….. Net Present Value and Profitability Index using 13% as required rate of return.
The following question is attempted by Miss Nimra Masood, the top scorer in CSS Business Administration papers. Moreover, the answer is written on the same pattern, taught by Sir to his students, scoring the highest marks in compulsory subjects for years. This solved past paper question is uploaded to help aspirants understand how to crack a topic or question, how to write relevantly, what coherence is, and how to include and connect ideas, opinions, and suggestions to score the maximum.
Topic Breakdown:
Chapter: Capital Budgeting
Subject: Financial Accounting
The three capital budgeting techniques are payback period, net present value and Internal rate of return. The concept and formulas of capital budgeting must be clear to students as it is often given in CSS exams.
Every Year two questions from the portion of Finance are must in Business Administration. For Students to gain maximum marks out of this paper finance portion should be prepared exceptionally well.
| Years | Cash Flow | Amount |
| 0 | Initial cash flow | (150000) |
| 1 | Cash outflow | 50000 |
| 2 | Cash outflow | 56000 |
| 3 | Cash outflow | 64000 |
| 4 | Cash outflow | 68000 |
| 5 | Cash outflow | 72000 |
Definition of Payback Period:
In capital budgeting terms the payback period is explained as the time required to recover its initial investment. In other words, it is known as the break-even point; above this point, all earnings are the sole profits of the business.
Formula:
Definition of Net Present Value:
It is the current value of all future cash flows generated by the project. It is used to estimate the today’s value of future cash payments.
Formula:
Definition of Profitability Index:
It is also known as the profit-investment ratio. It allows calculating the amount of value earned per unit of investment. In simple words it is a measure of the project’s attractiveness.
Formula:
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