NMIMS MBA DECEMBER 2018 LATEST ASSIGNMENTS AVAILABLE

  • 250.00
  • Published date: November 13, 2018
    • Delhi, Delhi, INDIA, India

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Course : Strategic Financial Management
1. Bajaj Limited expects to see a growth of 20% every year in free cash flow to equity (FCFE) over the next 3 years. The growth is likely to decline to 10% over the subsequent two years. After that, it is expected to be at a stable level of 6% per year. The FCFE in the current year is Rs 20 per equity share.
Compute the fair value per share based on the FCFE approach. Assume 20% cost of equity.
2. Companies X and Y are into the same business with different capital structures.
X Y
Number of outstanding equity
shares 200000 100000
Face Value per share (Rs) 10 10
Market price per share (Rs) 15 20
Dividend per share (Rs) 2 3
Growth in dividend (YOY %) 0% 10%
No of debentures 0 10000
Market price per debenture (Rs) 95
Interest rate (on face value Rs 100) 10%
Calculate the weighted average cost of capital of X and Y. Assume income tax rate of 30%.
3. A manufacturer is exploring a proposed production of premium quality widgets. The required machine would cost Rs 2 lakhs and has a useful life of 5 years. For the purpose of tax, relevant depreciation allowed on the machine is 20 percent on written down value basis. The salvage value is realizable at the end of 5 years. Initial working capital required is Rs 100,000 and is expected to remain constant year on year. Widgets can be sold at Rs 8 each. Around 75,000 widgets can be sold per year. A cash fixed cost of Rs 50,000 is expected to be incurred every year. Variable cost is estimated to be Rs 4 per widget. The tax rate is 30%.
Assume 20% cost of capital.
(a) Evaluate the proposal based on its NPV.
(b) Would the investment decision be the same based on IRR approach? Explain.

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NMIMS MBA DECEMBER 2018 LATEST ASSIGNMENTS AVAILABLE

  • 250.00
  • Published date: November 13, 2018
    • Delhi, Delhi, INDIA, India

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