FM12 Financial Management: Assignment No.I
FM12 Financial Management: Assignment No.I
FM12 Financial Management: Assignment No.I
Financial Management
Assignment No.I
Attempt all the questions. All the questions are compulsory and carry equal marks.
Section-A
Ques.1 A firm’s sales, variable costs and fixed cost mount to Rs.70,00,000, Rs.42,00,000 and
Rs.6,00,000 respectively. It has borrowed Rs.45,00,000 at 9 percent and its equity
capital totals Rs.55,00,000.
(b) A project costs Rs.6,000 and it has cash flows of Rs.4,000, Rs.3,000, Rs.2,000 and
Rs.1,000 in years 1 through 4. Assume that the associated αt factors are estimated
to be: a0 = 1.00 a1 = 0.90, a2 = 0.70, a3 = 0.50 and a4 = 0.30, and the risk-free
discount rate is 10 percent.
Will you advice the project to be selected.
Ques.3 (a)Should the company restructure its business? What are the important financial and
non-financial considerations?
(b)Which financial alternative do you suggest for the company and why?
Section-B
(Rs. In
Lakhs)
Equity Capital (10 lakhs shares at par value) 100
12% Preference Share (10,000 shares at par value) 10
Retained Earnings 120
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14% Non convertible Debentures 70
(70,000 debenture at par value)
14% term loan from APSFC 100
TOTAL 400
The market Price per Equity Share is Rs. 25. The next expected dividend per share (DPS) is Rs. 2.00 and
the DPS is expected to grow at a constant rate of 8%. The preference shares are redeemable after 7 years at par
and are currently quoted at Rs. 75 per share in the stock exchange. The debentures of face value of rs 100/- each
are redeemable after 6 years at par and their current market quotation is Rs. 90 each. The tax rate applicable to
the firm is 50%.
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FM12
Financial Management
Assignment No.II
Attempt all the questions. All the questions are compulsory and carry equal marks.
Section-A
Ques.1 The annual demand for an item is 3,200 units. The unit cost is Rs. 6 and inventory-
carrying cost is 25% per annum. Cost of procurement is Rs. 150 per order.
Determine:
(a)Economic Order Quantity,
(b)Number of orders per year,
(c)Time between two consecutive orders.
Section-B
Agrawal Refrigerators Ltd. manufactures quality refrigerators of different specifications. This requires an
input of material ‘ZED’. The following particulars are collected for the year 2008-09.
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