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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
|
20000
|
30000
|
40000
|
45000
|
50000
|
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)
Dear students, get fully NMIMS solved assignments
by professionals
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or call us at :08263069601
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