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Internal
Assignment Applicable for April 2018 Examination
Corporate
Finance
1: Calculate the degree of operating
leverage and degree of financial leverage for the following firms:
|
Firms
|
A
|
B
|
|
Sales (Rs.)
Variable cost p.u
Fixed cost (Rs.)
Output (units)
Interest
|
3,60,000
20
72,000
6,000
40,000
|
7,50,000
150
1,40,000
1,500
80,000
|
Q2. A Project costs Rs 60,000 and is
expected to generate cash inflows as:
|
Year
|
Cash inflows(Rs)
|
|
1
|
10000
|
|
2
|
12000
|
|
3
|
15000
|
|
4
|
18000
|
|
5
|
20000
|
|
6
|
22000
|
Q3. Solve the following:
a) A company earns 5 per share. The cost
of capital is 10%, the rate of return on investment is 14% and the dividend
payout ratio is 25%. Calculate the value of each share by using Walter’s Model.
b) XYZ Limited has a paid-up share
capital of Rs. 10 lakhs of Rs. 10 each. The company has a dividend payout rate
of 10%. Annual growth rate is expected to be 4%. The capitalisation rate is
20%. Calculate the value of the share of XYZ based on Gordon’s Model.
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