Jawaharlal Nehru Technological University Hyderabad
Jawaharlal Nehru Technological University Hyderabad B.Tech III Year ENGINEERING ECONOMICS AND ACCOUNTANCY Previous Question Paper (March - 2021 - R18)
Answer any five questions. All questions carry equal marks.
Main
Define Supply and discuss the law of supply.
Answer
Supply refers to the quantity of a commodity that producers are willing and able to offer for sale at various prices during a specific period of time, ceteris paribus. It is a flow concept representing the relationship between price and quantity supplied.
The Law of Supply states that there is a direct relationship between the price of a commodity and the quantity supplied, assuming other factors remain constant. As the price of a good rises, the quantity supplied increases because higher prices offer greater profit potential, encouraging producers to expand production or new firms to enter the market. Conversely, as the price falls, the quantity supplied decreases.
The law is represented by an upward-sloping supply curve. Key assumptions include constant technology, stable input prices, no changes in government policy, and constant prices of related goods.
What is meant by demand forecasting? Explain the methods used in demand forecasting and their limitations.
Answer
Demand forecasting is the process of predicting future demand for a firm's products based on past data, market trends, and economic indicators. It is essential for production planning, inventory management, and financial budgeting.
Methods of demand forecasting include:
- Survey Methods: Includes consumer surveys and the sales force composite method. These rely on direct feedback from customers or sales staff.
- Statistical Methods: Uses historical data, such as trend projection, regression analysis, and time-series analysis, to identify patterns and project future demand.
- Expert Opinion Method: Involves gathering insights from industry experts or the Delphi technique to reach a consensus on future demand.
- Market Experimentation: Conducting controlled market tests or test marketing to observe actual consumer behavior under specific conditions.
Limitations include:
- Uncertainty: Future events like economic shifts or natural disasters are unpredictable.
- Data Reliability: Historical data may not always be accurate or representative of future conditions.
- Cost and Time: Sophisticated forecasting methods can be expensive and time-consuming to implement.
- Subjectivity: Qualitative methods like expert opinions are prone to personal bias and human error.
How is National Income derived? What is the GDP? What information does it give us about a nation? What is per capita income? If you wanted to know about the economy of a country, which would you consider more important, and why?
Answer
Sign in to view the complete answer paper.
A company is considering an investment proposal to install a new machine. The project will cost Rs. 50,000 and will have a 5-year life and no salvage value. Tax rate is 50%. The company follows the straight-line method of depreciation. The net earnings before depreciation and tax are as follows:
| Year | 1 | 2 | 3 | 4 | 5 |
|---|---|---|---|---|---|
| EBDT(Rs) | 10,000 | 11,000 | 14,000 | 15,000 | 25,000 |
Evaluate the project by using: a) PBP b) ARR c) NPV @10% d) IRR e) PI@10%
Answer
Sign in to view the complete answer paper.
The Udipi Tiffins Company is contemplating investing Rs.1 million in four new outlets in Hyderabad. Ranjay Kamat, the firm’s chief financial officer (CFO), has estimated that investments will pay out cash flows of Rs.2,00,000 per year for nine years and nothing thereafter. The cash flows will occur at the end of each year and there will be no cash flow after year 9. Mr. Kamat has determined that the relevant discount rate for this investment is 15%. Should the Udipi Tiffins Company make the investments in the new outlets?
Answer
Sign in to view the complete answer paper.
Explain the EBIT-EPS analysis with a suitable example.
Answer
Sign in to view the complete answer paper.
If the use of financial leverage magnifies the earnings per share under favorable economic conditions, why do companies not employ very large amounts of debt in their capital structure?
Answer
Sign in to view the complete answer paper.
“Break-even analysis is based on a simplified model of a business which is unrealistic”. Explain and give your answer.
Answer
Sign in to view the complete answer paper.
What is a Balance sheet? Explain the distinction between trading and profit and loss account and Balance sheet.
Answer
Sign in to view the complete answer paper.
Record the journal entries for the following:
- Business started with cash 8,000 and plant & machinery 3,000.
- Stock purchase for sale (cash purchase) = 3,000, credit purchase = 5,000.
- Wages paid 120,000 (including 20,000 relating to a future year).
- Salaries paid 200,000 but due 110,000.
- Sales made for cash 600,000 and on credit 800,000.
- Depreciation 10 percent on plant & machinery.
- Goods costing 20,000 destroyed by fire.
- Payment made to creditors to the value of 200,000 at 10 percent discount.
Answer
Sign in to view the complete answer paper.