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Assignment Applicable for JUNE 2018 Examination
Course:
Strategic Financial Management
1. From the
following details supplied by Amaya Plastics ltd. you are required to:
a. Calculate the
Net Present Value
b. Calculate the
Discounted Payback Period
For each Capital
Expenditure proposal given below:
Details Proposal A
Proposal B
Initial Cost Rs.
20,00,000 Rs. 15,00,000
Expected life 10
years 8 years
Cash flows before
tax
after depreciation
Rs. 3,00,000 each
for
first four years
Rs. 2,00,000 for
next 6
years
Rs. 2,00,000 each
for first
five years
Rs. 3,00,000 for
last three
years
Estimated scrap
value Rs. 50,000 Rs. 1,00,000
The discounting
factor is 12% and tax rate 30%.
(10 Marks)
2. Kailash Ltd.
Earns Operating Profit (EBIT) of Rs.1,80,00,000 at existing capital
structure. You are
required to calculate financial leverage and EPS with the help of
Following
information
Particulars Amount
in Rs
13.5% Debentures (
FV 100) 4,00,00,000
15% Cumulative
Preference Shares( FV 100) 1,00,00,000
Equity Share
Capital ( FV 10) 3,00,00,000
8,00,00,000
Tax rate 35%
(10 Marks)
3. A) Naysha Ltd.
has the following capital structure as on 31st March,2017
10% debentures
(before tax) (Rs) 300000
9% preference
shares (Rs) 200000
Equity shares of
Rs.100 each 500000
Total 1000000
The equity shares
of the company are quoted at Rs.102 and the company is
expected to
declare a dividend of Rs.9 per share for the year. Tax rate is 40%
required.
Calculate the cost
of capital (5 Marks)
3. B. Discuss the
cheapest form of raising long term finance with reference to
Question 3 (A) and
state the reasons for the same. (5 Marks)
Course:
International Finance
1. Finance
minister Mr. Arun Jaitley announced in the budget about long term capital gain
tax, share market gave negative reaction on it, explain the reaction of FII or
FPI on long term capital gain tax. (10 Marks)
2. “The Eurocurrency
market owes its existence to differences in national financial regulation
combined with declining barriers to international capital movements.” Do you
agree with the statement? Explain with the help of various Euro-Currency Market
instruments. (10 Marks)
3. The Chinese
government’s move to ban waste paper amidst environment concerns is expected to
benefit the Indian paper manufacturers.Waste Paper (WP) is one of the major
sources of raw material used for manufacturing the recycled paper products. The
recycled paper products are extensively used for manufacturing packaging
materials like corrugated boxes.The Chinese Government’s decision to ban waste
paper imports has caused a drop in global waste paper prices. As a result, the
price of recycled paper in China, used for packaging material, has increased
due to short supply of WP. Indian manufacturers using waste paper stand to
benefit on account of lower global waste paper prices (on excess supply) and
higher realization for recycled paper.The global shortage of wood pulp has
resulted in increasing prices of finished paper. Indian wood pulp based having
requisite self-sourcing (farm forestry) are expected to benefit from increasing
global finished paper prices.The companies like West Coast Paper, TNPL and NR
Agarwal Industries which majorly import waste paper for manufacturing processed
recycled paper are expected to improve margins on account of falling waste
paper prices. As per the industry reports, the global price fall in waste paper
is evident as the old corrugated containers (OCC), the most common form of
waste paper, fell from €150 per tonne in July 2017 to €135 per tonne in
December 2017. Also, the prices of Kraftliner, the recycled paper manufactured
by processing the waste paper, have risen from €642 per tonne in July 2017 to
€694 per tonne in December 2017.
a. Paper
manufacturing Industry is one of the important industry for India and China,
from above paragraph explain the positive and negative effects on the revenue
of Indian paper exporter. (5 Marks)
b. What will the
impacts on FOREX because of Government of China Decision on paper bans? How
India can take advantage of it? (5 Marks)
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