Friday, 11 January 2013
This particular Graded(GDB) will help the students understand:
Case:
Creative Company (Private) Limited has been operating in the field official consultancy business for last 25 years. It has become a well-known company due to its efficient and well-educated management. One of the financial experts of the company has recently left the company due to some unknown reasons. HR Department is now searching for a new financial expert who should have special expertise in the field of project evaluation as the company has to deal with the project evaluations for its clients on regular basis. After advertising the said vacancy, the company is now going through the recruiting process and the short listing has almost been done for the post. The interviews have been scheduled in the coming week. One of the HR managers suggests that the financial skills regarding project evaluation should be tested by having a discussion on two of the capital budgeting techniques i.e. IRR and AAR. On the day of interview, the interviewees have been provided with the following details about three projects:
Required:
How would you respond to the following questions during the interview if you are one of the potential candidates for the said post?
- ·The concepts regarding two importantcapital budgeting techniques i.e. Internal Rate of Return(IRR) and Average Accounting Return (AAR).
- ·The analytical application of said techniques according to the provided information in a given scenario.
- ·The technical difference between the said important techniques.
Case:
Creative Company (Private) Limited has been operating in the field official consultancy business for last 25 years. It has become a well-known company due to its efficient and well-educated management. One of the financial experts of the company has recently left the company due to some unknown reasons. HR Department is now searching for a new financial expert who should have special expertise in the field of project evaluation as the company has to deal with the project evaluations for its clients on regular basis. After advertising the said vacancy, the company is now going through the recruiting process and the short listing has almost been done for the post. The interviews have been scheduled in the coming week. One of the HR managers suggests that the financial skills regarding project evaluation should be tested by having a discussion on two of the capital budgeting techniques i.e. IRR and AAR. On the day of interview, the interviewees have been provided with the following details about three projects:
Required:
How would you respond to the following questions during the interview if you are one of the potential candidates for the said post?
- Why IRR (Internal Rate of Return) is different for all three projects?
- Why AAR (Average Accounting Return) is same for all three projects?
- Which of the techniques is better to use in order to select the project in this particular scenario and why? Explain with rationale.
