2020 June Nmims assignments - Nisha has completed her MBA and has joined a compa - Bangalore

Thursday, 7 May 2020

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City: Bangalore, Karnataka
Offer type: Offer
Price: Rs 1,000

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Strategic Financial Management

1. From the following information of the two projects calculate the net present value and suggest which of the two projects should be accepted assuming a discount rate of 10%.
TABLE GIVEN BELOW

Project X Project Y
Initial Investment ₹ 25,000 ₹ 30,000
Estimated Life 5 years 5 years
Scrap Value ₹1,500 ₹2,000

The profits before depreciation and after taxes are as follows:
Years 1 2 3 4 5
Project X(₹) 5,000 10,000 12,000 7,000 3,000
Project Y(₹) 20,000 10,000 7,000 5,000 2,000

2. Nisha has completed her MBA and has joined a company which was going to raise fund from long term sources such as Debt and Equity. Nisha was asked by her manager to prepare a report on which could be a better source of funding for the firm mentioning the advantages of each to be presented to the Management so that it is easy for them to take the decision. Help her to prepare the report. (10 Marks)

3. The following information is given for Delta Ltd.
Earnings per share ₹ 15
Dividend per share ₹5
Cost of Capital 15%
Internal Rate of Return On Investment 20%
Retention Ratio 65%

Calculate the market price per share using

a. Gordon’s Dividend Model (5 Marks)
b. Walter’s Dividend Model (5 Marks)

For answersheets contact
info.answersheets@gmail.com
91 95030-94040