NMIMS Global Access
School for Continuing Education NGA-SCE
Course: Strategic Financial Management
Program (Old) : PFDFM
Semester: IV
Assignment Marks: 30
Instructions:
All Questions carry equal marks.
All Questions are compulsory
All answers to be explained in not more than 1500 words. Use relevant examples,
illustrations as far as possible.
All answers to be written individually. Discussion and group work is not advisable.
Students are free to refer to any books/reference material/website/internet for
attempting their assignments, but are not allowed to copy the matter as it is from the
source of reference.
Students should write the assignment in their own words. Copying of assignments
from other students is not allowed.
1. EBIT of X Ltd is $75,000, cost of debt is 10% and debt is $200,000. The overall cost
of capital is 12%. Calculate the value of the firm and the cost of Equity.
( 10 Marks)
2. Following is the information drawn from Y Ltd. (10 Marks)
Sales Revenue Rs1,50,000
(–) Operating Cost Rs 40,000
(–) Interest Cost Rs 20,000
Earning before tax Rs 90,000
(–) Tax (30%) Rs 27,000
Earning after tax Rs 63,000
Equity = Rs 70,000
Cost of equity= 15%
Debt = Rs 30,000
Cost of debt = 12%
Determine Economic Value Added.
3. Calculate Weighted average cost of capital from following information (10 Marks)
Capital Market value Cost of each security
Debt Rs4,00,000 8%
Preference Rs 1,00,000 10%
Equity Rs 3,00,000 14%
Retained Earning Rs 2,00,000 12%
***************
School for Continuing Education NGA-SCE
Course: Strategic Financial Management
Program (Old) : PFDFM
Semester: IV
Assignment Marks: 30
Instructions:
All Questions carry equal marks.
All Questions are compulsory
All answers to be explained in not more than 1500 words. Use relevant examples,
illustrations as far as possible.
All answers to be written individually. Discussion and group work is not advisable.
Students are free to refer to any books/reference material/website/internet for
attempting their assignments, but are not allowed to copy the matter as it is from the
source of reference.
Students should write the assignment in their own words. Copying of assignments
from other students is not allowed.
1. EBIT of X Ltd is $75,000, cost of debt is 10% and debt is $200,000. The overall cost
of capital is 12%. Calculate the value of the firm and the cost of Equity.
( 10 Marks)
2. Following is the information drawn from Y Ltd. (10 Marks)
Sales Revenue Rs1,50,000
(–) Operating Cost Rs 40,000
(–) Interest Cost Rs 20,000
Earning before tax Rs 90,000
(–) Tax (30%) Rs 27,000
Earning after tax Rs 63,000
Equity = Rs 70,000
Cost of equity= 15%
Debt = Rs 30,000
Cost of debt = 12%
Determine Economic Value Added.
3. Calculate Weighted average cost of capital from following information (10 Marks)
Capital Market value Cost of each security
Debt Rs4,00,000 8%
Preference Rs 1,00,000 10%
Equity Rs 3,00,000 14%
Retained Earning Rs 2,00,000 12%
***************
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