Skip to main content

MGT201 Current Final Term Fall 2013 Shared by Asad Akhtar File 3

What are the costs and benefits of holding inventories and cash?
Tax shield for the calculation of cost of debt but not for the calculation of the equity stock. Why? Give reason.
(3 marks)

Stock of JJ Company is currently trading at Rs. 150 and intrinsic value of stock is Rs. 163.93. What should be decision of rational investor in this situation (buying or selling)? Justify your answer. (3 marks)

 
MB Cement Company is a financially sound and the management wanted to declare and pay dividend to its shareholders but sufficient cash is not available to pay dividend.
Required: Being a financial analyst of MB Cement Company, what will be your suggestion to pay dividend and why?
  (3 marks)


A 100% Equity (Un-levered) Firm has Total Assets of Rs.50, 000.  Weighted average cost of capital for an un-levered firm (WACCU) is 35% and Cost of debt for un-levered firm (rD,U) of 20%. It then adds Rs.20, 000 of Debt. Financial risk increases cost of debt    (r D, L) of Levered Firm to 18%.
Required:
· What is the Levered Firm’s cost of equity (r E,L)?
· What will be the WACCL of levered firm?
(5 marks)

Differentiate forward market and future market.
(5 marks)

Rehan’s portfolio consists of two securities namely Attock Petroleum and Barclays bank. Expected risk of Attock Petroleum and Barclays bank are 12% and 14% respectively and weights of these securities are 75% and 25% respectively.
Required: By keeping in view the above situation, how the portfolio risk will be affected in case of perfect positive correlation and perfect negative correlation.
Note: Support your answer with complete working.
(5 marks)

Ali Industries has a “Project M” which is financed by issuing:
1. Bonds to NTN Company of Rs. 715,000 at 9% required rate of return.
2. 5,000 common stocks at par value of Rs. 125 per share. Company is currently paying dividend of Rs. 2.25 and it is expected to grow at constant rate of 5%. Intrinsic value of the share is Rs. 110.
3. Two thousands preferred stock. Dividend on preferred share Rs.5 and its intrinsic value and par value of share is Rs. 100.
Corporate tax rate is 35%.
Required: Calculate weighted Cost of Common Equity
NOTE: Show complete working and formulas, otherwise marks will be deducted.
(5 marks)

Comments

Post a Comment

Please give us your feedback & help us to improve this site.

Popular posts from this blog

CS614 Quiz No.4 Shared by Abdul_Mateen (Solved)

Question # 1 of 10 ( Start time: 01:03:34 PM ) Total Marks: 1 The first step of the “12-steps data warehouse implementation approach” of Shaku Atre is: Select correct option: Finding user needs (Page No. 336) Planning system resources Finding system scope Data acquisition and cleansing Question # 2 of 10 ( Start time: 01:04:15 PM ) Total Marks: 1 Users do not care, how advance the front end of your DWH is, what they care is that: Select correct option: Tables should be properly denormalized Proper partitioning technique should be used At least star or snow flake schema should be implemented They should get information in timely manner and the way they want   Question # 3 of 10 ( Start time: 01:04:49 PM ) Total Marks: 1 Which of the following is NOT one of the top-10 mistakes that should be avoided during DWH development? Select correct option: Not interacting directly with end user Not being an accommodating person (Page No. 316) Isolating IT support p...
Post a Comment
Read more

CS614 Quiz No.3 Shared by Sweety (Solved)

Question # 1 of 10 ( Start time: 09:48:28 PM ) Total Marks: 1 Mining multi dimensional databases allow users to: Select correct option: Categorize the data Analyze the data Summarize the data All of the given options   (Correct) Question # 2 of 10 ( Start time: 09:49:23 PM ) Total Marks: 1 As per Bill Inmon, a data warehouse, in contrast with classical applications is: Select correct option: Data driven   (Correct) Resource driven Requirement driven Time sensitive Question # 3 of 10 ( Start time: 09:50:11 PM ) Total Marks: 1 In ________learning you don’t know the number of clusters and no idea about their attributes. Select correct option: Supervised learning Unsupervised learning   (Correct) Multi Dimension modeling None of the given options Question # 4 of 10 ( Start time: 09:51:04 PM ) Total Marks: 1 Identify the TRUE statement: Select correct option: The data value increases as volume decreases   (Correct) The data value decreases ...
Post a Comment
Read more

CS614 Quiz No.1 Shared by Manzar (UnSolved)

Question # 1 of 10 ( Start time: 03:35:24 PM )   Total Marks: 1 MDX by Microsoft is an example of _______ Select correct option: HOLAP DOLAP ROLAP None of the given options Question # 2 of 10 ( Start time: 03:36:40 PM )   Total Marks: 1 In decision support system ease of use is achieved by: Select correct option: Normalization Denormalization Drill up Drill down Question # 3 of 10 ( Start time: 03:38:07 PM )   Total Marks: 1 Which of the denormalization technique squeezes master table into detail? Select correct option: Pre-joining Horizontal splitting Vertical splitting Adding redundant column Question # 4 of 10 ( Start time: 03:38:28 PM )   Total Marks: 1 The trade-offs of denormalization is/are: Select correct option: Storage Performance Ease-of-use All of the given options Question # 5 of 10 ( Start time: 03:38:46 PM )   Total Marks: 1 ________is usually deployed when expressions can be used to group data together in...
Post a Comment
Read more