problem 1) Answer all the problems:
i) What are major financial decisions? Describe.
ii) prepare down the differences between operating and financial leverage.
iii) What do you understand by operating cycle? How it is find outd.
iv) What is dividend? What is the difference between regular dividend and interim dividend?
v) What is weighted cost of capital?
problem 2) What is capital structure? Describe the factor affecting capital structure.
problem 3) prepare brief notes on:
a) Cash Management
b) Break Even Point
c) Cost Of Capital
problem 4) Mangal Ltd. Is consideration investing in a project requiring a capital outlay of Rs.2, 00,000.
Forecasted annual incomes after depreciation but before tax are as follows:
YEAR 1 2 3 4 5
INCOME 1,00,000 1,00,000 80,000 80,000 40,000
Depreciation may be taken as 20% on original cost of the asset and taxation at 50% of net income.
You are needed to evaluate the project according to each of the following methods:
i) Pay-back period,
ii) Average rate of return,
iii) Net present value and
iv) Profitability index.
The present value factor at 10% discount rate for I, II, III, IV and Vth year are: 0.909, 0.826, 0.751, 0.683 and 621 respectively.