NMIMS Assignments December 2019: Contact us for answers at assignmentssolution@gmail.com

NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Corporate Finance
Internal Assignment Applicable for December 2019 Examination
Assignment Marks: 30

1. Assume that ABC Ltd has equity share capital of ₹15,00,000 divided into shares of
Rs150 each. The company wishes to raise additional total capital of ₹6,00,000 for

expansion through ₹3,00,000 in equity shares and ₹3,00,000 in debts at 10%. The EBIT of
the company is ₹3,00,000 and tax rate is 50%. Calculate EPS. Suggest what will happen to
EPS if entire capital was raised through debts. (10 Marks)
2. Alpha Ltd is expecting an annual Earnings Before Interest and Tax of ₹1,50,000. The
company had 10% debentures of ₹ 5 Lakhs. Calculate the overall cost of capital of the firm
if the cost of Equity is 12% assuming NI approach in the calculation. Suggest what
happens to the value of the firm when more debentures are issued. (10 Marks)
3. Mr. Mehta works as a Management Consultant in XYZ Ltd and his role involved
analyzing capital investment projects. His manager asked him to analyze project X which
involved capital investments of ₹10,00,000 and the cost of capital of 12%. The projects net
cash flows are as follows:

Years	1	2	3	4	5
Cash Inflow	20,000	30,000	40,000	45,000	50,000

Calculate:
a. Net Present Value of the project and suggest whether project is to be accepted or not.
(5 Marks)
b. Internal rate of return and suggest whether project is to be accepted or not (5 Marks)
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