Project Management
Section A
Part One: 1. Liquidation value of the firm’s assets could be considered as … a. The minimum wealth of shareholders

2. If ‘P’ be the initial investment, ‘I’ be the interest rate and ‘T’ be the time period for which funds are invested then interest earned will be …
d. P*I*T 3. Following the above given conditions, compound interest is given by … b. P*(1+I)T 4. Firms resorting to “Proactive Growth” a. do constant strategic planning 5. SPACE stands for Strategic Position and Action Evaluation 6. Increasing market expenditure heading to an increased market share is known as … c. market expansion
7. If profit after tax is ‘A’, depreciation be ‘B’ and interest be ‘I’, then Interest cover ratio is given by
8. E-V rule is also called … 9. In case of internally generated funds the opportunity cost to the firm is … b. the lending rate
10. ‘PERT’ stands for Program Evaluation and Review Technique.

Part Two:

1. Write a note on ‘Sinking Fund Payment’.
Answer:
A sinking fund is a means of repaying funds that were borrowed through a bond issue. The issuer makes periodic payments to a trustee who retires part of the issue by purchasing the bonds in the open market.
Rather than the issuer repaying the entire principal of a bond issue on the maturity date, another company buys back a portion of the issue annually and usually at a fixed par value or at the current market value of the bonds, whichever is less. Should interest rates decline following a bond issue, sinking-fund provisions allow a firm to lessen the interest rate risk of its bonds as it essentially replaces a portion of existing debt with lower-yielding bonds.
From the investor's point of view, a sinking fund adds safety to a corporate bond issue: with it, the issuing company is less