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Assignment

The document outlines an assignment for MBA students focusing on Financial Management and Agri-Business Financial Management. It includes various financial problems such as calculating present value, average rate of return, cost of capital, and working capital requirements based on given data. Additionally, it addresses investment proposals and withdrawal calculations from a bank account over a specified period.

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4 views2 pages

Assignment

The document outlines an assignment for MBA students focusing on Financial Management and Agri-Business Financial Management. It includes various financial problems such as calculating present value, average rate of return, cost of capital, and working capital requirements based on given data. Additionally, it addresses investment proposals and withdrawal calculations from a bank account over a specified period.

Uploaded by

palabhilash903
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Faculty of Commerce & Management

Even Semester Examinations 2024-2025


Assignment 4

Course (Branch): MBA(DS/ABM) 2nd


Course Code: MBGM 2023N/ MBAB 203N
Subject Name: Financial Management/ Agri-Business Financial Management

1. What is the minimum amount which a person should be ready to accept today from debtor who
otherwise has to pay a sum of Rs. 5,000 today, Rs. 6,000, Rs. 8,000, Rs. 9,000 and Rs. 10,000 at the end
of year 1,2,3,4 respectively from today? The rate of interest is taken at 14%.

2. Pruna Company is considering an investment proposal to install new equipments for controls. The
project will cost Rs. 50,000. The company tax rate is 35%. The firm uses straight line depreciation. The
estimated profit before depreciation from the proposed investment proposal are as follows:-

Year Profit in (Rs.)


1 10,000
2 11,000
3 14,000
4 15,000
5 25,000

Compute average rate of return.

3. XYZ has issued 10,000 ordinary shares of Rs. 100 each. Details of company’s earnings and dividends
per shares during the past 4 years are as follows:-
4.
Year Earnings per Share (in Rs.) Dividend per Share
Ended (in Rs.)
2020 35 26
2021 33 27
2022 43 29
2023 42 30

The current (December2021) market value of each ordinary share of Nevada is Rs.235 cum-dividend.
The 2021 dividend of Rs. 30 per share is due to be paid in January 2022. You are required to estimate
the cost of capital for Nevada ordinary share capital.

5. Xerox Ltd. has a share capital of Rs. 2, 00,000 divided into share of Rs. 20 each. It has a major
expansion program requiring an investment of another Rs. 50,000. The management is considering the
following alternatives for raising this amount:-
i. Issue of 10,000 equity shares of Rs. 20 each.
ii. Issue of 10,000, 12% preference shares of Rs. 20 each.
iii. Issue of 10% debentures of Rs. 50,000.
The company’s present earnings before interest and tax (EBIT) are Rs. 40,000 per annum subject to
tax @50%. You are required to calculate the effect of cash of the above financial plan on the earnings
per share presuming:
a) EBIT continues to be the same even after expansion.
b) EBIT increases by Rs. 10,000.
c) The cost sheet of PQR Ltd. provides the following data:

Particulars Cost per Unit


(in Rs.)
Raw Material 50
Direct Labour 20
Overheads (including depreciation of Rs. 10) 40
Total Cost 110
Profits 20
Selling Price 130

Average raw material in stock is for one month. Average material in work-in-process is for half month.
Credit allowed by suppliers: 1 month; credit allowed to debtors: 1 month; Average time lag in payment
of wages: 10 days; average time lag in payment of overheads 30 days. 25% of the sales are on cash
basis. Cash balance expected to be Rs. 1, 00,000. Finished goods remain in the warehouse for one
month.
You are required to prepare a statement of the working capital needed to finance a level of the activity
of 54,000 units of output. Production is carried on evenly throughout year and wages and overheads
accrue similarly.

6. An investor deposits a sum of rs. 2,00,000 in a bank account on which interest is credited @ 10% p.a.
How much account can be withdrawn annually for a period of 15 years?

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