CORPORATE FINANCE NMIMS SOLVED ASSIGNMENTS APRIL 2018

NMIMS SOLVED ASSIGNMENTS
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CORPORATE FINANCE

1. Calculate the degree of operating leverage and degree of financial leverage for the following firms:
Firms A B
Sales (Rs.) 3,60,000 7,50,000
Variable cost p.u 20 150
Fixed cost (Rs.) 72,000 1,40,000
Output (units) 6,000 1,500
Interest 40,000 80,000

2. A Project costs Rs 60,000 and is expected to generate cash inflows as:
Year Cash inflows(Rs)
1 10,000
2 12,000
3 15,000
4 18,000
5 20,000
6 22,000

Calculate the Net Present Value of the project if the cost of capital is 10%.

3. 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 10 lakhs of 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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