Financial Management 2017 To 19
Financial Management 2017 To 19
Financial Management 2017 To 19
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MAULANA KALAM AZAD
UNIVERSITY OF TECHNOLOGY.
VWST BENGAL
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(d) Production is camed on evenly during the year and wages and overhead accrue
similarly
(e) Cash in hand is expected to be 10% of Net working capital.
8. X CO.has currently on equity share capital Ofe 40 Lakh, consisting of 40000 equity
The management is planning to raise another 30 Lakh to finance a major shareof? 100
programmeof
(i) Entirely through Equity issues.
(ii) 15 Lakh in Equity shares of e 100 each and balance in 8% Debentures.
(iii) 10 Lakh in Equity shares oft 100 each and balance through long term
borrowingsat 9%.
p.a.
(iv) 15 lakh in Equity Shares of 100 each and balance through
Preference Shareswith
dividend. The Co.'s EBIT will be 15 Lakh. Assuming Corporate Tax rate
of 50%.
You are required to determine the EPS and comment on the Financial
Leveragethat
9. A Co. wants to select a project from the three projects — X, Y and Z. In
each case, the initial
is 20,000. The Life span of each project is 6 years. The existing rate of
discount is 15%.The
net cash incomes (Z) of the projects are given in the following table: expected
Year x z
1 2,000 1,000 2,500
2 3,000 4,000 3,000
3 4,000 4,000 4,000
4 6,000 8,000 9,000
5 10,000 10,000 8,000
6 10,000 9,000 10,000
When the rate of discount is 15%, the PV factors are ()•8696,
0•7561, 0•6575, 0-5718,0•4972,04323
the 1st, 2nd, 3rd, 4th, 5th, 6th years respectively. Which for
project do you recommend and why?
10. X Co. has a cost of equity capital of 10%, the current market
value of the firm, V, is
share). The values for I (new investment),Y (earnings) and
D (dividends) at the end of theyearare
6.80.00(),
Y = Z 1.50.000 and D = < I per share.
Show that under the Modigliani—Millerassumptions,
the payment of 'D' does not affect thevalueOfthe
15
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GROUP - A
( Multiple Choice Type Questions )
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ii) Dividendsare usually paid as a percentage of
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