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Internal 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
Rs. 2,00,000 each for first
five years
Rs. 3,00,000 for last three
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
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%
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
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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