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FM Assignment

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0% found this document useful (0 votes)
11 views3 pages

FM Assignment

fmm

Uploaded by

Samir
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Q1. An investor issues a deep discount Bond is issued for Rs.

5,000 today and will mature in 15years


for Rs.20,000. Advise an investor whose opportunity rate of return 11%?

Q2. A firm is evaluating a proposal costing Rs.1,60,000 and expected to generate cash flows of Rs.
40,000, Rs.60,000, Rs.50,000, Rs.50,000 and Rs. 40,000. there is no salvage value there after.

Q3. Hunny Projects Ltd. Is evaluating two mutually exclusive investment proposals X and Y, The
company's required rate of return from such projects is 10%. The cash flows pattern of both the
proposals are given. Evaluate the proposals as per NPV and IRR methods.

Q4. A Business firm has to chose one of the two proposals.The relevant data for both of them is as
follows:

Projects A B

Initial Investment 150000 300000

Expected Cash Flows at the end of

Year 1 40000 80000

Year 2 56000 112000

Year 3 60000 120000

Year 4 45000 90000

Year 5 65000 130000

Evaluate both the projects using financial function NPV (at 12% rate of Interest) and IRR and
recommend which project should be accepted.

Q5. EPS 10
P-Eratio 10
Ke 10%
No. of Outstanding shares 20,000
Expected Dividend 5
Expected Net Income 200,000
New Investment 400,000

As per MM Approach, show that the payment of dividend does not affect the value of the firm. Use the
above data to prove the statement.

Q6.
Following are the details regarding 3 companies

A Ltd B Ltd C Ltd


IRR (r) 15% 10% 8%

Cost of Capital (Ke) 10% 10% 10%

Earning Per share 10.00 10.00 10.00

Using Walter model, calculate the effect of dividend payment on the value of share of the above companies under:

i) When no dividend is paid


ii) When dividend is paid @8Rs per share
ii) When dividend is paid @10Rs per share

Q7. Assuming that the rate of return expected by investors is 11%, internal rate of return is 12% and
earning per share is 15. Calculate price per share by Gordon Model if C/P ratio is 10% and 30%
Calculation of price per share by "Gordon model" if dividend payout ratio is 10% and 30%.

Q8. The following information for a particular year has been extracted from the books of a
manufacturing company:

Particulars Opening Closing

Raw Materials 200,000 300,000


Work in Progress 100,000 200,000
Finished Goods 300,000 400,000
Debtors 300,000 400,000
Creditors 200,000 300,000

Profit and Loss Account Amount

Purchases 1,600,000
Consumption 1,500,000
Total Production cost 2,500,000
Total cost of goods sold 2,800,000
Total Cost of sales 3,000,000
Sales 3,600,000

Q9. A performa cost sheet of a company provide you with the following particulars of Estimated
Cost per unit. Calculate working capital requirement from the data given below.

Cost elements Amount per unit


Raw materials 100
Direct Labour 40
Overheads 60
Total 200

Additional information:
Selling Price 250 per unit
Level of activity 104,000 units of production
Raw materials in stock 4 average weeks
Work in progress 2 average weeks
Finished goods in stock 4 average weeks
Credit allowed by suppliers 4 average weeks
Credit allowed to debtors 8 average weeks
Lag in payment of wages 2 average weeks
Cash at bank is expected to be 10% of gross working capital.

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