Ask Question, Ask an Expert


Ask Financial Management Expert

problem 1)a) The share capital of a company is Rs.8, 00, 000 with shares of face value Rs.10. It has a debt capital of Rs.5, 00, 000 at 12% interest rate. The sales of the company are 2, 50, 000 units per annum at a selling price of Rs.5 per unit and the variable cost per unit is Rs.3. The fixed cost is Rs.1, 00, 000 and tax rate is 50%. If the sales increase by 20% find out the percentage increase in EPS, degree of operating and financial leverages at the two output levels. Comment on the behavior of leverages when the production is increased by 20%.

b) Describe the following terms with appropriate exs.

• Non- operating surplus

• Intangible fixed assets

• Sundry creditors

• Fixed liabilities

• Prepaid expenses

problem 2)a) A company purchased a machine for Rs. 5,,00,000 having a zero salvage value and a discounted payback period of 7.5 years. The firm follows straight line method of depreciation at a rate of 10%. If the cash flows are evenly distributed and the tax rate is 40%, what is the annual PBT on the machine? Also find out the IRR and NBCR of the machine if the cost of capital is 12%.

b) Find out the cost of capital of a company that is employing equity capital and term loans in the ratio 3:2 and paying a constant dividend of 12.5% per year and an interest of 14% per year. The tax rate is 40%.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M96602

Have any Question? 

Related Questions in Financial Management

Contingency planning focuses on theopportunity costs

Contingency planning focuses on the: opportunity costs involved with a project. sunk costs related to a project. economic effects on a project's profitability. managerial options implicit in a project. optional capital r ...

A treasury strips is quoted at 61159 and has 10 years until

A Treasury STRIPS is quoted at 61.159 and has 10 years until maturity. What is the yield to maturity? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign ...

You are a pension fund manager who anticipates having to

You are a pension fund manager who anticipates having to pay out 8 percent (paid semi-annually) on $100 million for the next seven years. You currently hold $100 million of a floating-rate note that pays LIBOR þ 2 1/2 pe ...

What is the value of a 1000 par value bond that has 6 years

What is the value of a $1,000 par value bond that has 6 years left to maturity and pays an annual coupon interest rate of 7.6% if bonds of similar risk are yielding 5.5%? Use financial calculator.

1 which of the following statements is correcta a warrant

1. Which of the following statements is CORRECT? a. A warrant is basically a long-term option that enables the holder to sell common stock back to the firm at an agreed upon price, at a specified time in the future. b. G ...

Assume that wesfarmers has a wacc of 17 pa the annual

Assume that Wesfarmers has a WACC of 17% p.a. The annual meeting is being held to decide capital expenditure for the following year. • Head of the resources division proposes a mining project with expected return of 24% ...

1 which statement is falsea any information or signaling

1. Which statement is FALSE? a. Any information or signaling effect of the dividend would occur on the declaration date. b. A stock split is a large stock dividend so that you might have twice as many shares with each sh ...

Identify at least three alternative exit strategies and

Identify at least three alternative exit strategies and analyze how each strategy impacts the potential resources required to initiate a new venture. Analyze how you can structure your venture to avoid potential exit str ...

1 marketability is the ability of an investor to sell a

1. Marketability is the ability of an investor to sell a security quickly, at a low transaction cost, and at a price close to its fair market value. to sell at a profit under all circumstances. to sell the security above ...

East side incthe management of east side inc is preparing

East Side, Inc. The management of East Side, Inc. is preparing its capital budget for 2015. East side has two divisions. One runs a restaurant (the Restaurant Division). The other brews beer (the Brewery Division). Most ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro