EPM-4 (AIIM)

MC
Assignment-1.

1. This is an individual assignment. The assignment consists of four problems, for each of which you
need to develop a spread sheet.

2. Keep all the four sheets in a single work book. Give self explanatory names to your workbook (your
own name) and to each work sheet.

3. Submit your work book to Programs Office at (or before) 5:00 PM, 7 Feb 2020 through an e-mail
attachment. Please do not mail or mark a copy of the assignment to me, as it would flood my mail box.

4. Keep a copy of your work with you till the program is over.

5. Some problems already have a work sheet developed, with questions asked to guess some formulae
behind some cells. Take the questions as guidelines to help you develop your work sheets.

6. In answering some questions, you may have to refer to the course material, or refer to the online help
of the excel package itself.

7. You are encouraged to go beyond the questions asked and develop additional features in your work
sheets, if you want. The objective of the assignment is to provide an opportunity to you to gain further
practice with the spread sheet, and therefore some more confidence in problem solving with spread
sheet software, and not to make you just obtain an answer to a fixed question.
Problem-1. Financial Appraisal of a School Project.
A Philanthropist wants to construct an elementary school, consisting of classes 1 to 5, in his
neighborhood, and run it for ten years, on a no loss, no profit basis. At the end of the ten-year period,
he intends to hand over the school to an NGO without charging anything.

The construction cost of the building, which is incurred right at the beginning, would be born by the
philanthropist, as would all the staff and operational expenses. Schools are exempt from property taxes.
The philanthropist hopes that the above expenditure would be recovered eventually through the fee
paid by the students over the te-year period.

As the construction is expected to take one year, the school would become operational only at the end
of the first year; from then the classes can start. All the staff are expected to be in place by then, and
their payments are assumed to start from then onwards.

The following estimates are used for the planning of the project:

Number of square feet needed per student ( including not only class room space, but all other places) =
30

Construction cost per square foot (Rs) = 400

Total staff cost per month ( salaries + other expenses) , considering all the staff (6 teachers + 1 peon + 1
clerk)= Rs 70,000, during the first year of operation. This would increase by 10% per year during every
subsequent year.

Other operational costs per year (electricity etc) = Rs 25000, during the first year of operation, and this is
expected to increase at the rate of 5% per year later.

Assume that the costs of an year occur at the beginning of the year

The philanthropist wants to keep the number of students in each class at fifty. The proposed fee per
students in each class is Rs 30,000 per year. These numbers are mere proposals, and they are open for
discussion. In the first year itself, he plans to admit students in all five classes. Ignore income tax in your
analysis.

1. Through analysis of the above cash flows with a discount rate of 0.1 per Rs per year, find the
number of students per class which would lead to NPV of zero, keeping the fee at Rs 30000 per year
2. Keeping the number of students per class at 50, find the fee per student in Rs per year, which would
lead to NPV of zero.
3. Construct a data table with the two independent variables Fee/student, and number of students per
class, and with dependent variable being NPV. Assume values of your own for the independent
variables.
Problem-2. Evaluation of Job Applicants ( page 96 of your course material)
Problem-3. Tuition Fees (Page 100 of your course material)
Problem-4. Conference Budget Problem with an Extension
Replicate the work done in class on the conference budget problem, with the addition of two columns:

The first should show for each cost item, the component due to delegates, and the second the fixed
costs, that is costs due to non-delegates (speakers + volunteers + guests for inauguration + guests for
dinner). The cost of conference hall and miscellaneous expenses are to be classified as fixed costs, as
they do not vary with number of delegates.

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