Explain the Following Terms with Examples
[14 marks]Annuity & Perpetuity
[ marks]Capital Rationing
[ marks]Decision Tree Analysis
[ marks]Capital Structure
[ marks]Operating Cycle
[ marks]YTM
[ marks]Gross Working Capital & Net Working Capital
[ marks]What is Credit Management? Explain various credit policy variables
[7 marks]Determine the working capital required for ABC Ltd. to Finance a level of activity, which produces and sales 1,80,000 Units of output for a year. The cost structure is as under; Particular Cost Per Unit (Rs.) Raw Material Direct Labour Overheads (Including Depreciation of Rs.5) Total Cost 40 Profit Selling Price 50 Additional Information :- 1. Minimum desired cash balance is Rs.20,000 2. Raw Materials are held in stock for the period of 2 Months 3. Work in Progress will approximate to half a month Production, Assume 50% Completion Stage 4. Finish goods remain in warehouse for a period of one month 5. Suppliers of the materials extended the credit of one month 6. The cash sales are 25% of the total sales. Debtors are provided Two month credit 7. Time lag for the payment of wages for a month and half a month for the overheads OR
[10 marks]Mr.Xdeposits Rs.1,00,000 in a Bank which pays 10 percent interest. How much can he withdraw annually for the Period of 15 Years to whittle down the account balance Zero. Page 1 of
[2 marks]Explain the Net Income approach of Capital Structure.
[7 marks]Vedanta Ltd.’s earnings and dividend have been growing at the rate of 15%. This growth is expected to continue for 4 years. After that the growth rate will fall to 12% for next 4 years. Thereafter the growth rate is expected to be 6% forever. If the last dividend per share was Rs. 3 and required rate of return is 10%, what is the intrinsic value per share?
[7 marks]Give Definition of Dividend. Explain the Walter Model of Dividend Decision
[7 marks]Unix Ltd.’s Equity Beta is 1.2 and the Market Risk premium is 7 percent. Risk free rate is 10 percent, Unix has a debt equity ratio of 2:3. Its Pretax cost of debt is 14 percent, if the tax rate is 35%. What is the WACC of Unix Ltd.
[7 marks]Discuss briefly the various sources of long term finance of Indian Companies
[7 marks]What is Leverage? Explain the Types of Leverages
[7 marks]Explain Matching and Aggressive approach of Working capital Financing policies
[7 marks]Explain Miller and Orr model of Cash Management
[7 marks]Zenith Industries are thinking to build up a Machinery in the organization, the investment behind this Project is Rs.20,00,000. The Project consisting period of 5 Years utility, Estimated salvage value of the Project is Zero, estimated by the company. Project manager used Straight-line method for depreciation calculation of the project. Tax slab of the Organization is 50%.The expected cash flow before depreciation and taxes of the project are as under; Estimated Cash flow before depreciation and Taxes Year (Rs.) 1 Rs.4,00,000 2 Rs.6,00,000 3 Rs.8,00,000 4 Rs.8,00,000 5 Rs.10,00,000 You are Required to determine;
[ marks]Net Present Value of the Project, If Cost of Capital is 10% 0
[7 marks]Workout Discounted Payback period of the Project, If the Cost of Capital is 12%
[7 marks]Internal Rate of Return of the Project
[7 marks]Pay Back Period of the Project Page 2 of
[2 marks]