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Dhaval Acharya… (Class 12 Business Studies SQP 2023-24, Q30)

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Business StudiesCBSE Class 12 · Sample paper, session 2023-24 · 4 marks · Long answer

CBSE Class 12 Business Studies sample paper 2023-24: question 30

From the official CBSE sample question paper for 2023-24, section C, question 30, for 4 marks. Try it first; the hints and our step-by-step solution are below.

Q30 · 4 marks · Long answerCompetency-basedFinancial Management

Dhaval Acharya, after acquiring a bachelor's degree in Hotel Management joined his father's chain of vegetarian restaurants in Ahmednagar. Being young and enterprising, he suggested his father to add a new section of vegetarian bakery items which required an investment of ₹ 5 crores. His father Mr. Aariketh Acharya suggested him to take the decision with caution and understood everything comprehensively as bad decision may damage the financial fortune of business.
Identify the decision suggested by Mr. Aariketh Acharya. State by giving any three reasons as to why he must have advised his son to take decision with caution.

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2023-24.

Hints

Open one hint at a time and try again before the next.

Hint 1

A ₹5 crore investment in a new section is which financial decision?

Hint 2

Why is such a decision hard to undo?

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. Capital budgeting (long-term investment) decision.

    1 mark

  2. Long-term growth: It affects the long-term growth and future prospects of the business.

    1 mark

  3. Large amount of funds: A large sum (₹5 crore) is blocked in a long-term project, so it needs detailed analysis.

    1 mark

  4. Irreversible: Once taken, it cannot be reversed without heavy loss. (Also: affects the returns and risk complexion of the firm.)

    1 mark

Answer: Capital budgeting decision; it must be taken with caution because it affects long-term growth, involves large funds and is irreversible (also affects risk and returns).

Where the marks are

  • Identification (1)
  • Any three reasons: 1 mark each

Revise the chapter

Practise this chapterBoard-style questions from Financial Management, one at a time, marked against the answer key and marking points.Back to the full paperSample paper 2023-24: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.