Nmims April assignments - Calculate Net Present Value and Profitability Index. Comment whether project should be accepted or not. Assume cost of capital is 10%. Enumerate the steps of calculation of NPV.
Nmims April assignments - Calculate Net Present Value and Profitability Index. Comment whether project should be accepted or not. Assume cost of capital is 10%. Enumerate the steps of calculation of NPV.
Nmims April assignments - Calculate Net Present Value and Profitability Index. Comment whether project should be accepted or not. Assume cost of capital is 10%. Enumerate the steps of calculation of NPV.
For answersheets contact
info.answersheets@gmail.com
+91 95030-94040
Corporate Finance
1. ABC Ltd. is
considering two financing plans to raise ₹ 8, 00,000. The key information is as follows:
TABLE GIVEN
BELOW:
|
Plan
|
Equity
|
Debt
|
Preference
Shares
|
||
|
1
|
50%
|
50%
|
|||
|
2
|
50%
|
50%
|
|||
Expected EBIT
is ₹ 2, 40,000.
Cost of Debt is
10% and cost of Preference Shares is 10%.
Tax rate is 50%.
Equity shares of
the face value of ₹ 10 each
will be issued at a premium of ₹ 10 per share.
Calculate
Earnings per share for plan 1 and 2 and suggest which one is better. (10 Marks)
2. A Project
costs ₹ 60,000 and
is expected to generate cash inflows as:
|
Year
|
Cash inflows(₹)
|
|
1
|
10,000
|
|
2
|
12,000
|
|
3
|
15,000
|
|
4
|
18,000
|
|
5
|
20,000
|
|
6
|
22,000
|
Calculate Net
Present Value and Profitability Index. Comment whether project should be
accepted or not. Assume cost of capital is 10%. Enumerate the steps of
calculation of NPV.
3. The following
information is given for Alpha Ltd.
|
Earnings per
share
|
₹ 12
|
||
|
Dividend per
share
|
₹ 3
|
|
|
|
Cost of
Capital
|
18%
|
|
|
|
Internal Rate
of Return On Investment
|
22%
|
|
|
|
Retention
Ratio
|
75%
|
|
|
Calculate the
market price per share using
a. Gordon’s
Dividend Model (5 Marks)
b. Walter’s
Dividend Model (5 Marks)
 |
| Nmims April assignments - Calculate Net Present Value and Profitability Index. Comment whether project should be accepted or not. Assume cost of capital is 10%. Enumerate the steps of calculation of NPV. |
For answersheets contact
info.answersheets@gmail.com
+91 95030-94040
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