Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Section-A

problem1) How do venture capital investors value their investment in the company? What are some of the factors which can influence this valuation?

problem2) Compare following four methods of raising finance with the help of suitable ex:

(i) Public Issue

(ii) Rights Issue

(iii) Private Placement

(iv) Preferential Allotment

problem3) prepare brief notes on Global Depository Receipts

problem4) Describe the types of project risk and the measures of risk.

Section-B

The government is considering the multi-purpose river valley project that will involve construction of a dam, a reservoir, a power house, and several irrigation canals. The project will supply water for irrigation, generate electricity and provide a measure of protection against floods. The following information has been gathered by the project control board.

The project would need the following during the construction stage:

1) Indigenous power equipment costing Rs. 200 million.

2) Imported power equipment costing $10 million.

3) 20,000 tonnes of steel produced indigenously and made4 available to project at Rs. 800 a tonne.

4) 3, 50,000 tonnes of cement produced indigenously and made available to project at Rs. 800 per tonne.

5) Other construction materials (sand, bricks etc costing Rs. 100 million.

6) 25 million mandays of unskilled labour for which project control board has decided to pay daily wage rate of Rs. 10.

7) Skilled labour costing Rs. 100 million.

Once commissioned the operating and maintenance cost of the project will be Rs. 35 million per year.

The annual benefit expected from the project will be as follows:

1) 3, 00,000 acres of land would be irrigated.

2) 120 million units of electricity would be generated for domestic use.

3) Flood damages to the extent of 10 million Rs. would be saved annually.

The following extra information is available:

1) Power equipment produced indigenously is a tradable item whose FOB value is 4 15 million.

2) A gift of $ 10 million available from a foreign agency could be used for acquiring imported equipment. This gift though, is not project-tied. Therefore, if it is not assigned to the project, it could be used for some other purpose.

3) The Shadow price per dollar is Rs. 12, though the official price is Rs. 10.

4) Steel is a tradable item whose FOB value is $ 400 per tonne.

5) Cement is not a tradable item. One-half of the cement needed for the project would come from extra domestic production which has a cost of Rs. 700 per tonne, one-half of the cement needed for the project would come from diversion from other consumers who are willing to pay on average, Rs. 1,200 per tonne.

6) Other construction materials are non-tradable items. The needs of the project would be met by way of extra production. The cost of this production would be Rs. 80 million.

7) shadow price of unskilled labour is Rs. 5 per day.

8) compensation paid to skilled labour reflects what others are willing to pay for their services.

9) operating and maintenance cost of Rs. 35 million reflects economic value as well.

10) water levy by project control board will be Rs. 100 per acre. Though, the value of additional output per acre, attributable to water supplied by the project will be Rs. 400 a year.

11) the electricity tariff charged by the project control board will be 30 paise per unit. The consumer willingness to pay, though will be, on an average, 50 per cent more than the tariff charged.

12) project control board is not able to collect anything for the protection provided against floods.

Required:

Define the costs and benefits from the private (project control board’s) and economic point of view.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M93218

Have any Question? 


Related Questions in Basic Finance

Using the idea that you have chosen finish your paper by

Using the idea that you have chosen, finish your paper by covering the following: I have chosen Uber Technologies as my company. I will copy after the instructions of the assignment, some information that I have already ...

Stock a offers an expected return equal to 18 with a

Stock A offers an expected return equal to 18% with a standard deviation equal to 22%. Gold offers an expected return equal to 10% with a standard deviation equal to 30%. The correlation between stock A and gold is equal ...

Calculating cost of equitythe dybvig corporations common

Calculating Cost of Equity The Dybvig Corporation's common stock has a beta of 1.7. If the risk-free rate is 4.8 percent and the expected return on the market is 10 percent, what is Dybvig's cost of equity capital? (Do n ...

1 what assumption about the future composite rate of

1. What assumption about the future composite rate of interest on an adjustable rate mortgage is made when determining the APR for federal truth-in-lending disclosures? 2. List the closing cost items which require RESPA ...

Suppose you think msft stock is going to appreciate

Suppose you think MSFT stock is going to appreciate substantially in the next yr. The stock's current price is $100and call options expiring in 1 yr has an exercise price of $100 and is selling for $5. With $1,000 to inv ...

Faro technologies whose products whose products include

FARO Technologies, whose products, whose products include portable 3D measurement equipment, recently had 17 million shares outstanding trading at $42 a share. Suppose the company announces its intention to raise $200 mi ...

What is the relation between a companys operating risk and

What is the relation between a company's operating risk and its optimal capital structure? What is meant by the pecking order theory of capital structure? What are the implications of the Modigliani-Miller theory of capi ...

A company will purchase a new machine with a cost of 750000

A company will purchase a new machine with a cost of $750,000. The machine requires aninitial investment in net working capital of $25,000. Net working capital will remain at this levelduring the life of the machine and ...

1 compare and contrast the theories of absolute and

1. Compare and contrast the theories of absolute and comparative advantage. 2. How does the Heckscher-Ohlin (HO) theory build on the earlier work of absolute and comparative advantage? 3. The Leontief Paradox finds oppos ...

How would a relatively high home inflation rate affect the

How would a relatively high home inflation rate affect the home country's current account, all other thing being equal? How would you expect a weakening home currency to affect the home country's current account, all oth ...

  • 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

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

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen