CAT 2023 Paper Slot 1: Sample Question & Solution (Indian Gaming Context)
Question (Hypothetical Example):
*XYZ Games, an Indian gaming company, plans to launch a new mobile game in two regions: South India and North India. The following data is provided:
South India (Region A):
Investment Cost: ₹50 million
Expected Revenue: ₹120 million
Market Risk: 30%
North India (Region B):
Investment Cost: ₹70 million
Expected Revenue: ₹160 million
Market Risk: 50%
The company has a budget of ₹120 million and aims to maximize risk-adjusted returns. The risk adjustment factor is calculated as ( \text{Net Profit} \times (1 - \text{Risk %}) ). Which combination of regions should XYZ Games invest in?*
Solution:
Calculate Net Profit for Each Region:
Region A: ( \text{Revenue} - \text{Cost} = ₹120M - ₹50M = ₹70M )
Region B: ( \text{Revenue} - \text{Cost} = ₹160M - ₹70M = ₹90M )
Apply Risk Adjustment:
Region A: ( ₹70M \times (1 - 0.30) = ₹49M )
Region B: ( ₹90M \times (1 - 0.50) = ₹45M )
Evaluate Possible Combinations:
Option 1: Invest in Region A Only
Total Investment: ₹50M
Risk-Adjusted Return: ₹49M
Option 2: Invest in Region B Only
Total Investment: ₹70M
Risk-Adjusted Return: ₹45M
Option 3: Invest in Both Regions
Total Investment: ₹50M + ₹70M = ₹120M
Risk-Adjusted Return: ₹49M + ₹45M = ₹94M
Conclusion:
Option 3 (Both Regions) maximizes the risk-adjusted return (₹94M) while fully utilizing the ₹120M budget.
Answer: XYZ Games should invest in both South India (Region A) and North India (Region B).
Key Takeaways for CAT备考:
Risk-Adjusted Returns: Always prioritize projects with higher risk-adjusted profits, not just absolute returns.
Budget Utilization: Combine investments to fully utilize funds and diversify risk.
Data Interpretation: Translate numerical data into actionable insights efficiently.
For specific CAT 2023 questions, refer to official resources or trusted prep platforms like CAT 2023 Answer Key by TCS iGate, Vivek’s CAT, or Cracku. Let me know if you need further clarification!
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