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Corporate Finance
1. Compute the NPV and IRR for project whose initial cost is 30,000 and cash inflows are 14000, 8200, 12000, 15000, 22000. Discount Rate is 10%. Cost of Capital if borrowed is 15%.
Show value of NPV at IRR as discount factor. Based on the above calculations, should the project be considered?
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2. Calculate the Cash Cycle using the following information. (Assume 360 days in a year).
30% of sales are on credit and 80% of purchases are on credit.
3. a. In the following balance sheet calculate the Current Ratio and the Acid Test Ratio.
BALANCE SHEET AS AT 31ST MARCH 216
I.
II. ASSETS
3. b. Sanghvi & Sons P. Ltd. is a private limited company with almost 80% shareholding with the Sanghvi family. It has now a requirement of Rs. 400 crores for a project to be undertaken. Currently it has a debt-equity ratio of about 1.5:1. The management of the company feels that a ratio of up to 2:1 is acceptable. Discuss whether the company should fund its requirements by Debt or Equity and various considerations for the same.
Question 1:
Office Products Ltd provides the Sales and the cost data for 60,000 units as given below.
At full capacity the plant can produce 100,000 units
Sales Rs. 12,00,000
Costs:
Variable:
Material Rs. 2,40,000
Labour Rs. 3,60,000
Overheads Rs. 1,80,000
Fixed Cost Rs. 3,20,000
Total Rs. 11,00,000
PROFIT Rs. 1,00,000
Prepare the Income statement under marginal costing for production at 80,000 units.
Question 2:
Nikson Ltd provides the following information relating to the activities of a production department for the month of January 2023
Material Used Rs. 72,000
Direct wages Rs. 60,000
Machine hours 20,000 hours
Labour hours 24,000 hours
Overhead chargeable to the department Rs. 48,000
The relevant data for carrying out one order in the month of February is given below:
Material used Rs. 4,000
Direct Wages Rs. 3,300
Machine hours 1,200 hours
Labour hours 1,650 hours
Using the rates of the month of January, prepare a comprehensive statement of cost for this order by using the following absorption of overheads
1) Direct labour hours
2) Percentage of direct wages
3) Machine hour rate
Question 3a
Samsung Ltd. are the manufacturers of Television. The following are the details of a Product during the year 2022.
Ordering Cost Rs.50 per order
Inventory carrying cost 10% per annum
Cost of Product A is Rs. 500 per unit
Annual consumption of Product A is 5000 units.
Compute the Economic order quantity. What if the inventory maintained by the company is 200 units?
Question 3 (b) a) Prashant wants to buy a Pure Risk Life Insurance cover of Rs 1.5 crore. He is confused whether he should buy a ULIP or a Term Plan. Recommend the product best suited for his requirement. b) Prashant and Priti want your help to invest for their daughter’s higher education which they estimate would be required after 15 years.
New Corp Ltd. incurs fixed costs of Rs. 5,00,000 per annum. The company produces a single product with annual sales budgeted to be 70,000 units at a sales price of Rs.300 per unit. Variable costs are Rs.280 per unit.
You are required to determine the breakeven point and explain the significance of breakeven point.
Q1) Develop a Public Relations campaign for IRDA to help create awareness about Life Insurance sector and to educate policyholders about their rights.
Q2) Amit Chopra, (age 31 years) works with a pharmaceutical company and has not yet started to invest for his retirement. Amit is married to Neelam (age 28 years) and they have one son aged 2 years. Amit wants you to prepare a plan for him to retire by age 60. (You can make any assumptions to further build up your case.)
Q3) You are a Financial Planner. Your client Prashant Pandey aged 35 years and works with an IT company earning Rs 15 lakhs per year. His wife Priti, aged 32 years, is a homemaker. They have one daughter aged 5 years. The couple requires your help to make some financial decisions. (You can make any assumptions to further build up your case.)
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