Attempt all the problems

problem1) Information of Firm ‘A’ is given below:

Total Sales               2,00,000 Units
Selling Price                   Rs. 20/Unit
Fixed Cost                   Rs. 3,00,000
Variable Cost                  Rs. 15/Unit
Debt                       Rs. 5,00,000@ 10% interest rate
Equity Shares              Rs. 10,00,000
Face Value of Shares    Rs. 10 per share
Tax Rate                                   45%

Compute degree of operating leverage, degree of financial leverage and degree of combined leverage.

problem2) a)  Describe linear interpolation method of bond valuation. 

b) Preference share which pays the dividend of Rs. 6.75 has the par value of Rs. 100. If investor’s required rate of return in 9%, what would be the value of preference share?

problem3) Describe the various types of bonds with their features.

problem4) Describe the NI and NOI theories of Capital Structure.

problem5)a) Given below are cash flows of the project. Determine net present value of project. Cost  of capital is 18% and initial investment is Rs. 2,00,000.

Year    Cash Flows (lakhs)
1.                  40
2.                  45
3.                  60
4.                  60
5.                  75

b) Ashok is to receive the amount of Rs. 15,00,000 from his relative after 3 years. He wishes to buy the house for which he wants money to be paid now. His relative had already invested money at the rate of 9.25%. Compute how much money Ashok would get now?