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FM PROBLEMS
- Mr. X’s savings is RS.1000 in 2 yr , with 6% interest compounded semi – annually. He will be paid 3% interest compounded. calculate amount Mr. X gets after 6 Months.
a) 1,060.90 c) 1,030. b) 1,092.73 d) 1,125.
- Mr. X deposits RS.2000 for 5 yrs ,5% interest compounded annually. Calculate the amount at the end Of 5th^ yr.
a) (^) 7,890 c) 11, b) 11,567 d) 11,
- Mr. Y wants to find the present value of RS.2000 to be received after 5yrs, 10% is interest rate. The Relevant PVIF value is 0.621.
a) 4,216 c) 4, b) 2,438 d) 1,
- Mr. X consisting of cash inflows of RS.1,000 per yr for 5 yrs with it 10%. Determine the present value
a) 3,241 c) 3, b) 2,431 d) 7,
The ABC company received RS.1,00,000 for a period of 10 years. Assume 10% interest .the PVIF Value is 6.145. find the sum of the present value of annuity. a) 4,51,000 c) 6,15, b) 5,66,000 d) 6,14,
A limited company borrows from RS.10,00,000 @12% of interest to be paid in equal end-of-year Installments. The value is 3.605. Assume the repayment period is 5years. What would be the size of the installment?
a) 3,11,923 c) 2,77, b) 2,77,393 d) 2,77,
- A company has 15% perpetual debt of RS.1,00,000. The tax rate is 35% .Determine the cost of capital (before tax and after tax) Assuming the debt is issued at (i)Par, (ii) 10% discount, and (iii) 10% premium.
a) (11%,25%), (31%,12%), (15%,9.25%) b) (14%,9.27%), (16.5%,10.00),(13%,7%) c) (15%,9.75%), (16.7%, 10.85%), (13.6%, 8.84%) d) (12%,8.25%), (11.7%, 12.45%), (13.1%,7.74%)
A company issues a new 15% debentures of RS.1,000 face value to be redeemed after 10 yrs .sold at 5% discount. Floatation costs of 2.5%. tax rate is 35%.find the cost of debt. Illustrate the computations using (I) trial and error approach and (ii) shortcut method. a) 11%,10.9% b) 10%,11.1% c) (^) 14%,12.5% d) 13%,13.1%
A company issued 15% debentures aggregating RS.1,00,000. The Floatation cost is 5% .The repayment of debentures at par in 5 equal installments. Tax rate is 35%. Find the cost of debt.
a) 13% b) 14% c) 5% d) 12%
- A company issues 145 irredeemable preference shares of face value of RS.100 each. Floatation Costs at 5% of the expected sale price. a)What is the kp, if preference shares are issued at
(i) par value, (ii) 10% premium, and (iii) 5% discount. b) Also, compute kp, in these situations assuming 10% dividend tax.
a) (I) 17.7%,16.3%,13.5% b) (I) 16.2%,14.7%,17.1% (ii) 14.7%,13.4%, 15.5% (ii) 12.2%,13.7%,16.1% (iii)18.7%,124%, 16.7% (iii) 11.3%,14.5%,15.5%
- ABC ltd has issued 14% preference share of face value of RS.100 each to be redeemed after 10 yr
. Floatation cost is expected 5%. Determine cost of preference shares (kp).
a) 17% b) 14% c) 18% d) (^) 15%
- Dividend per share of a firm is Re 1 per share next year and is expected to grow 6% year perpetually. Determine the cost of equity capital, assuming the market price per share is RS 25.
a) 12% b) 6% c) 13% d) 10%
The following information is available in respect of company X: (i) Current dividend per share, RS.2. (ii) Current market price per share, RS.75. (iii) Current growth rates of dividends : What is the cost of its equity capital, assuming a fixed dividend pay out ratio? a) 2.5% b) 6.4% c) 9.5% d) 7.7%
The Hypothetical Ltd wishes to calculate its of equity capital using the capital asset pricing model approach. From the information provided to the firm by its investment advisors along with the firms own analysis, it is found that the free-risk rate equals 10%: the firm’s beta equals 1.50 and the return on the market portfolio equals 12.5%. Compute the cost of equity capital.
a) 13.75% b) 12.34% c) 11.1% d) 27.7%
(i) Required rate of return on risk-free security,12% (ii)Required rate of return on market portfolio of investment is 15% (iii)The firm’s beta is 1.6. Determine the cost of equity capital using the CAPM approach. a) 16.8% b) 12.9% c) 14.6% d) 159%
The purchase of equity shares of a company which had paid a dividend of RS.5% share last year. The dividends are expected to grow at 6% for ever. Required rate of return in the capital market 12%.what will be maximum price you will recommend the investor to pay for an equity share of the company.
a) 80.24% b) 78.56% c) 67.89% d) 88.33%
- A mining company’s iron ore reserves are being depleted, and its cost of recovering a declining quantity of iron ore rising each year. As a consequence, the company’s earnings and dividends are declining, at a rate of 8% per
c) NPV Zero d) NPV none
- KE is reciprocal of
a) p/e ratio b) NP ratio c) KO d) None
Dep will be ________ to NPAT to get CF
Tax will be calculated after
a) NP after DEP b) NP before DEP c) CFBT d) CFAT
- IRR will be accepted if
a) NP High rate b) Zero rate c) Low rate d) None
- PV of RS1 is equal to @12% discount after 5 years.
a) 0. b) 0. c) 0. d) 0.
- Future value of investment Re.1 after 3 years at 10% interest .the value is equal to
a) 1(1+.10)^3
b) 1/(1.10)^3 b) 1(1.10) c) None
If MP is Rs.20 .Total profit is 40,000, no of outstanding shares=10,000. What is P/E Ratio
If MP of selling cost is 40,Buying cost 100. What is exchange Ratio.
If A Ltd profit is 2,00,000, B Ltd is 6,00,000 No of Total shares 40,000, what is combined EPS
If A Ltd take over the B Ltd in 0.8 ratio.A Ltd profit is 1,00,000, B Ltd 80,000, No of shares A=40,000,B=40,000, What is combined EPS.
A Ltd taken over B Ltd and combined EPS-14.12. P/E Ratio of A is 10 times B Ltd 8 times, What is MP of New Co.
After Merger Market Price is Rs.40,Before Merger is A-38,B-42, What is Net Benefit if A Co has 20, shares , BLtd has Rs.10,000 shares, combined share is Rs.28,000 shares.
A Ltd allotted 20,000 shares to B Ltd for the existing share holder of B Ltd who has 25,000 existing shares. What is the exchange ratio.
A Ltd taken over B Ltd by payment of cash rs.20 per share. Altd has profit of 5,00,000, B Ltd has 2,00, profit and A Ltd has 50,000 equity shares, B Ltd has 20,000 equity shares. What is combined EPS.
According to Walter, Dividend is based on
a) Market value b) Investor preference c) Relation between Ke & R d) None
- The MV is Maximum if
a) r>ke b) r<ke c) r=ke d) None
The P1 under M/M is calculated by using the formula _________.
The MV under Walter is based on formula __________.
The MV under Gordon method is based on formula __________.
Gordon method is based on
a) Dividend b) Retained earnings c) Market price d) None
- M/M under Dividend policy proves that
a) Dividend makes maximum of Market value b) Dividend makes least Market value c) Dividend will not affect the Market value d) None
If the KE is 12%. The value of equity is _________ if the EBT is 60,000. If the KO is 15%, EBIT- 75,000, the total value of the firm is ________.
NI approach proves the optimum capital structure is based on
a) Equity b) Debenture c) Both d) None
NOI approach
Arbitrage process is derived on
a) NI b) NOI c) Traditional d) None
- Arbitrage process is derived by
a) Miller b) Jonsion c) Adam’s d) Fisher
- Arbitrage process stated that the optimum capital structure is
a) Related to debenture b) Not related to debenture c) Related to equity & Debenture
c) capital profit d) none
- Bonus shares is a) Payment value b) Gift to equityshare holder c) Gift to general public d) Gift to preference share holder
