Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

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

Oak enterprises has a beta of 12 the market return is 8 and

Oak Enterprises has a beta of 1.2, the market return is 8%, and the T-bill rate is 4%. Its tax rate is 40%. What is its expected required return of common equity?

Company z raises 30 on 40 with vc taking convertible

Company Z raises 30 on 40 with VC taking convertible preferred with a conversion price equal to the current share price implied by post money valuation. The conversion rate is 1 PS for 1 CS. Founders originally had 10M s ...

Distinguish an operating asset from a financial

Distinguish an operating asset from a financial (non-operating) asset.

Go to wwwgpoaccessgov a web site that has the statistical

Go to www.gpoaccess.gov, a Web site that has the statistical tables for the Economic Report of the President. On the left of your screen, you will see a category entitled "Database Features." Click on "Downloadable Repor ...

Go to Go to www.bankrate.com/calculators/savings/simple-savings-calculator.aspx. Using

Go to www.bankrate.com/calculators/savings/simple-savings-calculator.aspx. Using this site, you can estimate how your savings will grow. a. By inputting an investment amount, the monthly deposit, the return, and the peri ...

1 a project has cash flows of -119000 52800 60200 and 33100

1. A project has cash flows of -$119,000, $52,800, $60,200, and $33,100 for years 0 to 3, respectively. The required rate of return is 12%. Based on the net present value of ____ you should ____ the project A. -$147.60, ...

Calculate the current return on american water works co inc

Calculate the current return on American Water Works Co Inc AWK:US 71.59 USD and compare it to returns on bonds. Which is better to invest in presently a stock or a bond in this company and why?

As part of its overall plant modernization and cost

As part of its overall plant modernization and cost reduction program, the management of Tanner-Woods Textile Mills has decided to install a new automated weaving loom. In the capital budgeting analysis of this equipment ...

Consider a riskless spread with a long position in the

Consider a riskless spread with a long position in the August 160 call and a short position in the October 160 call. Determine the appropriate hedge ratio. Then show how a $1 stock price increase would have a neutral eff ...

In each case examined in this chapter and in the preceding

In each case examined in this chapter and in the preceding problems, we did not account for the interest on funds invested. One useful way to observe the effect of interest is to look at a conversion or a reverse convers ...

  • 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