FINANCIAL MNAGEMENT PAPER SOLUTION Q. 1 A B Q. 2 A MULTI PERIOD VALUATION SHARE PRICE = 121.

74 DELTA Ri = 24,60,556 WORKING CAPITAL EXAMPLE TOTAL CURRENT ASSETS = TOTAL CURRENT LIABILITIES = 18,14,125 3,16,250 7 MARKS 7 MARKS 7 MARKS

WORKING CAPITAL = 14,97,875 MEANING OF LEASE FINANCE. DIFF. BETWEEN LEASE AND HIRE PURECHASE OR COMPARE PREF. SHARE WITH BONDS COMPARE PREF. SHARE WITH WQ. SHARE

7 MARKS

7 MARKS

Q. 3

SANGITA ENTERPRISE
1 2 3 4 5 OPERATING CASH 13,82,800 13,00,960 12,35,422 11,83358 11,42,273 FLOW TERMINAL CASH FLOW = Rs. 32,00,000

7 MARKS

NET PRESENT VALUE PROJECT - X = PROJECT - Y = PROFITABILITY INDEX PROJECT - X = PROJECT - Y = OR WACC

-- 1855 -- 1544 7 MARKS 0.91 0.90

Q. 3

B Q. 4 A

1. BOOK VALUE METHOD = 12.05 % 2. MARKET VALUE METHOD = 11.89 % COST OF CAPITAL - MEANING AND IMPORTANCE LEVERAGE DCL = 5.68 5% CHANGE IN SALES CAUSES 28.43 % CHANGE IN EPS

7 MARKS

7 MARKS

PREFERENTIUAL ALLOTMENT AND PVT. PLACEMENT

7 MARKS

Q. 4

OR COST OF CAPITAL EXP. OF ANIL AND SUNIL CoC CoC ANIL SUNIL = = 16 % 15.33 % 7 MARKS

B Ke Ko

VALUE OF FIRMS U AND L = = 0.2750 OR 27.50 % 0.1511 OR 15.11 % 7 MARKS

Q. 5

ANS. 1 ANS. 2

P1 P1

= =

125.12 131.52 DIV. NOT PAID 1,21,655 7 MARKS

NO. OF NEW SHARES B Q. 5 A

DIVIDEND PAID 1,68,798

BUY BACK MEANING AND EFFECTS OR VALUE OF SHARE A = 25 % 108.80 B = 50 % 115.20 FINAL ANSWER = 128 C = 75 % 121.60

7 MARKS

B 1. 2. 3. 4.

PAY OUT METHODS CONSTANT DIVIDEND PER SHARE CONSTANT PAYOUT 3. CONSTANT DIVIDEND + EXTRA DIV. PAY OUT NO DIV. PAY OUT

7 MARKS

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