Roll No.__________________
24 August, 2015
Sarhad University, Peshawar
(Distance Education)
Paper
: Financial Management- (A) FIN435
Examination: Final, Spring-2015
Total Marks: 70, Passing Marks (35)
Time Allowed : 3 hours
NOTE: Attempt any five questions. All questions carry equal marks Phones and other Electronic Gadgets are
not allowed.
Q1.
The Weinstein corporation has a targeted capital structure that is 80% equity , 20% debt , the floatation
cost for equity issues are 20% of the amount raised. The floatation cost for debt issues are 6%, if
Weinstein needs 65 million for new manufacturing facilities, what is the true cost, once floatation costs
are considered.
Required: Calculate the Weighted Average Floatation Cost.
Q2.
.
Elaborate the stand alone principle and other issues related to incremental cash flows?
Q3.
Explain the concept of merger and acquisition in detail?
Q4.
Discuss the M & M Proposition 1 and 2?
Q5.
Shaheen Air has 1.4 million shares outstanding. The stock currently sells for 20$ per share. The firm debt
is publically traded and was recently quoted at 93% of face value. It has a total face value of 5 million
and it is currently priced to yield 11%. The risk free rate is 8% and market risk premium is 7%. It is
estimated that shaheen air has a beta of .74. if the corporate tax is 34%
Required: Calculate WACC?
Q6.
Elaborate the Acquisition Terms in Detail?
Q7.
Elaborate the Residual Theory of Dividend in Detail?
Q8.
Write Short notes on the following:
a) Agency Theory
b) Different types of Financial Markets
Financial Management- (A) FIN435-Spring-2015
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