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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
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)