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

CS504 Quiz No.3 Shared by Angel

Question # 1 of 10 ( Start time: 09:08:01 PM ) Total Marks: 1 Defining the services of an object means: Select correct option: What it does?        ok What it knows? Who knows it? Whome it knows? Question # 2 of 10 ( Start time: 09:08:27 PM ) Total Marks: 1 Which one of these represents the Krutchen’s 4+1 architectural view model? Select correct option: Logical view, Process view, Physical view, Development view, Use case view Logical view, Dynamic view, Physical view, Development view, Use case view Logical view, Process view, Physical view, Development view, Sequence view Dynamic view, Process view, Physical view, Development view, Use case view Question # 3 of 10 ( Start time: 09:09:50 PM ) Total Marks: 1 Return values in Synchronous messages are represented by: Select correct option: A solid line A dotted line with label        ok A solid line with label Double line Question # 4 of 10 ( Start tim...
Post a Comment
Read more

CS302 Quiz No.4 Shared by Jawwad

Question # 1 of 10 ( Start time: 01:15:08 PM ) Total Marks: 1  Asynchronous mean that_____________  Select correct option:  Each flip-flop after the first one is enabled by the output of the preceding flip-flop  Each flip-flop is enabled by the output of the preceding flip-flop  Each flip-flop except the last one is enabled by the output of the preceding flip-flop  Each alternative flip-flop after the first one is enabled by Question # 2 of 10 ( Start time: 01:16:36 PM ) Total Marks: 1 A divide-by-10 ring counter requires a minimum of Select correct option: ten flip-flops five flip-flops four flip-flops twelve flip-flops Question # 3 of 10 ( Start time: 01:17:00 PM ) Total Marks: 1 When the number of states are reduced during the design any counter Select correct option: output changes and Input remain unchanged Input changes and output remain unchanged Input and output bith change Input and output remain unchanged Question # 4 of...
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