NMIMS Global Access
School for Continuing Education (NGA‐SCE)
Course: Strategic Financial Management
Internal Assignment Applicable for September 2016 Examination
Assignment Marks: 30
Instructions:
All Questions carry equal marks.
All Questions are compulsory
All answers to be explained in not more than 1000 words for question 1 and 2 and for
question 3 in not more than 500 words for each subsection. 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. East Co. is considering the potential acquisition ofWest Co. by exchange of equity shares and
the exchange ratio is based on the current market price.The basic data is as under:
(10 Marks)
East Co. Ltd. West Co. Ltd. EAT (Rs.) 200,000 60,000
No. of Equity
Shares 40,000 10,000
Market Value per
share 15 12
NMIMS Global Access
School for Continuing Education (NGA‐SCE)
Course: Strategic Financial Management
Internal Assignment Applicable for September 2016 Examination
Calculate the new EPS of East Co. Ltd, if the exchange ratio is based on-
a. Current market price
b. Current EPS
2. An Infrastructure company has recently been awarded a sea link project. The funding has to
be external as the organization itself is not capable to provide it from its own sources. They
have decided to approach a financial institution for the same. The CEO has hence asked you
as Financial Manager to explain various stages involved in project financing (10 Marks)
3 A) C Ltd. has been running a huge cash balance in its Balance Sheet for quite some time. The
shareholders have been concerned that the company is unable to utilize its cash effectively.
Having noted this concern during the AGM, the BOD has decided to pursue M&A activity
aggressively. As an M&A strategy consultant, you are briefly expected to discuss the
techniques of Business Valuation (5 Marks)
3 B) During the recently concluded AGM, a small shareholder group had created a ruckus on
the amount of dividend paid by the company in last few years. They have been dissatisfied
with the amount and have been demanding higher dividends. Discuss in brief the practical
considerations that the management takes into account while deciding the various dividend
policy. (5 Marks)
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