Exam Pattern

Questions Marks Total Syllabus

20 1 20 <== Theory (Excel, Accounts, Eco FM)

4 5 20 <== Valuation models and Franchise Case
6 10 60 <== Project FSA cases, IS completion, BS completion, CFS completion, Revenue Analysis
30 100

70+ Grade A
60-70 Grade B
50-60 Grade C
<50 Not Clear No negative marking
mpletion, Revenue Analysis
Sample Question Paper
QUESTION PAPER

1. When a unit change in supply results in a unit change in price, supply is referred to as _________
[1 Marks]
(a) Perfectly Elastic
(b) Perfectly Inelastic
(c) Unitary Elastic
(d) None of the above
(e) Not Attempted

2. Following are the details of an IT Company's revenue for the past 3 years - Year-1 = 12000, Year-2 = 14500,
Year-3=17000, million INR. 40% of the revenue comes from onsite and remaining from offshore.The number of
employees working onsite is 15% of the total employee strength every year.The employee count for the
company each year is 5000, 6000 and 6800.The onsite utilisation is 87% for all 3 years.The offshore utilisation
has been 2000 bps lower than onsite utilisation. Assuming that the onsite and offshore billing rates per hour
increase at 2% per year, project the revenues for the next 3 years. Assume 250 working days per year and 8
hours of working for every day.Company expects to add 500 employees every year.15% of the total employees
would be onsite, others offshore.Utiilisation rates are expected to remain same, for both onsite and offshore as
that in year-3, for the next 3 years.What is the revenue for Year-6?

[10 Marks]
(a) 18899
(b) 20618
(c) 23246
(d) 22020
(e) Not Attempted

3. Which of the following is a correct representation of formula in excel?

[1 Marks]
(a) =sum(AB)
(b) =sum(A1,B1)
(c) =sum(A1:B1)
(d) =sum(A1B1)
(e) Not Attempted

4. A company has a D/E of 0.6. As per the balance sheet, the outstanding debt is Rs.10000 bearing an interest rate of
12%. The cash and cash equivalent is Rs.1500. The net income of the company is Rs.5500 and the tax rate is 30%. The
depreciation and amortization amount is Rs.2500. Calculate the EV/EBITDA of the company. Consider the book value of
equity same as the market value of equity of the company.

[5 Marks]
(a) 5.48
(b) 4.42
(c) 3.49
(d) 2.17
(e) Not Attempted
5. _______ is a market structures in which there exists a single buyer, but many sellers.
[1 Marks]
(a) Oligopoly
(b) Monopoly
(c) Monopsony
(d) Duopoly
(e) Not Attempted

6. Calculate the ROE of the company with the use of following information: EBIT = Rs.4500, Tax rate = 35%, Interest rate
[5 Marks]
(a) 15%
(b) 14%
(c) 10%
(d) 8%
(e) Not Attempted

7. Which of the following is the most accurate statement regarding a Financial Model:
[1 Marks]
(a) Excel containing historical financial data
(b) Basic calculaition tool
(c) A decision making tool
(d) Excel spreadsheet with numbers
(e) Not Attempted

8. Increase in government spending causes ______________ of private investment.

[1 Marks]
(a) Inflation
(b) Unemployment
(c) Money Supply
(d) Crowding Out
(e) Not Attempted

9. _______ is a market structures in which there exists a single seller, and several buyers.
[1 Marks]
(a) Oligopoly
(b) Monopoly
(c) Monopsony
(d) Duopoly
(e) Not Attempted

10. BOD Co a franchise of Dr. Reddyy pharmacy, sells 200 strips/day of low budget drugs at an average contribution of R
drugs at an average contribution of Rs.75/ strip.Sales volume and average price are expected to grow by 5% every year fo
needs to have a 1250 sqft space for retail shop with a lease rental of Rs.180 / sqft / month (rental contract for 5 years, dep
renovation of the premises worth Rs.30,00,000 will need to be incurred at the start. Required personnel costs are Rs 125,0
8%. Other operational expenses are expected to be 30% of the contribution, generated for the period.Tax rate in the econo
forward.The initial investment (deposit + renovation) can be funded by 60% bank loan (@13% interest rate). The remaining
be repaid at the end of 5 years in lump sum. Other investment opportunity with BOD Co. is expected to provide a return of
project life of 5 years. After 5 years the franchise will be handed over to Dr. Reddyy and the deposit will be refunded to the
invests in the project, what is the expected IRR?
8%. Other operational expenses are expected to be 30% of the contribution, generated for the period.Tax rate in the econo
forward.The initial investment (deposit + renovation) can be funded by 60% bank loan (@13% interest rate). The remaining
be repaid at the end of 5 years in lump sum. Other investment opportunity with BOD Co. is expected to provide a return of
project life of 5 years. After 5 years the franchise will be handed over to Dr. Reddyy and the deposit will be refunded to the
invests in the project, what is the expected IRR?

[10 Marks]
(a) 18.74%
(b) 19.74%
(c) 15.00%
(d) 17.00%
(e) Not Attempted

11. _______ is a market structures in which there exists a single seller, and single buyer.
[1 Marks]
(a) Oligopoly
(b) Bilateral Monopoly
(c) Monopsony
(d) Duopoly
(e) Not Attempted

12. Which amongst the following are applications of a financial model?

[1 Marks]
(a) Merger Valuation
(b) Project Appraisal
(c) Equity Research
(d) All of the above
(e) Not Attempted

13. Following are the details of revenues from 2 segments for a company. Segment-1: Year-1 = 3000, Year-2 = 3500, Yea
Segment-2: Year-1 = 1500, Year-2 = 1400, Year-3 = 2000. Both segments have worked at a gross margin of 25% for segm
10% for segment-2 for all the 3 years. The selling and administration expenses have remained at 10% of the revenues for
The company additionally has a debt of 3400 since Year-1 to Year-3, which has an interest rate of 9%. Debt will be repaid
5 years. Company has fixed assets of 5500 for all 3 years. These were depreciated at 5% each year (assume depreciation
same for all 3 years (SLM)). The tax rate for the company is 35%.Complete the Income statement of the company based o
data and Compute the Net Profit for the year-3. Don't assume any interest income. Tax losses if any, are not carried forwa

[10 Marks]
(a) 61
(b) -125
(c) -131
(d) 125
(e) Not Attempted

14. Mr.XYZ has purchased a car by borrowing a loan of Rs.750000 bearing an interest rate of 12% per annum for 7 years
[1 Marks]
(a) Rs. 13,108.46
(b) Rs. 11,820.40
(c) Rs. 12,642.26
(d) Rs. 11,360.67
(e) Not Attempted

15. What is the acid test ratio ratio of company which has current asset worth 25 mn, current liability worth 10 mn and inve
[1 Marks]
(a) 2.1
(b) 2
(c) 1.5
(d) 2.5
(e) Not Attempted

16. Current cash flow details of the company are as provided. Use these assumptions to estimate the FCFE for current pe
flows based on a 2 stage FCFE model and compute the Intrisic Value per share as per the FCFE model. Current period sh
for the valuation purpose. EBITDA for the company is 1750. Company has charged a depreciation of 300 in the current yea
of 1500 at 8% interest rate. The tax rate of the company is 20%. During the year the company added new machinery worth
capital reduced by 50. Debt raised during the year was 150 and repaid was 275. Cost of equity for the company is 20%. Nu
the company are 500. The company's FCFE is expected to increase by 15% for the next 5 years and then expeected to re
forever.

[5 Marks]
(a) 23.94
(b) 21.66
(c) 29.43
(d) 20.65
(e) Not Attempted

17. Following is the selected financial data of a Services Company provided to the analyst.Year - 1 (Y1) is actual data and
and year-3 (Y3) are projections.Income Statement forecast details are as follows: Revenue Projection : Y1 = 9000, Y2=110
12500.COGS Projection Y1 = 6000, Y2 = 7250 , Y3 = 8900.Depreciation : Y1 = 700, Y2 = 800, Y3 = 900 ; Tax : Y1 = 600,
Y-3=700.No other item is present in the Income Statement.Balance Sheet forecast details are as follows: Cash : Y1 = 4800
6031.94, Y3 = 7102.8, Accounts receivable : Y1 = 2500, Inventory : Y1 = 3000, PPE, Net : Y1 = 9000, Accounts payable :
Debt : Y1 = 7500,Y2 = 7500, Y3 = 7500, Equity : Y1 = 7500, Y2= 7500, Y3=7500, Retained earnings : Y1 = 2800.No other
are present in the blanace sheet.DSO, DOH and Payable days are expected to remain the same for all the projection year
year-1.Every year the company is going to add 1000 of new capex.Assume new capex gets added at the start of the year a
depreciation is considered in the above given values.What is the total Liabilities and Shareholders’ Equity for the Year - 3?

[10 Marks]
(a) 25874
(b) 29514
(c) 24325
(d) 21825
(e) Not Attempted

18. Current cash flow details of the company are as provided. Use these assumptions to estimate the FCFF for current pe
the cash flows based on a 3 stage FCFF model and compute the Intrisic Value per share as per the FCFF model. Current
should not be considered for the valuation purpose. Net Income for the company is 750, Tax rate is 35% and there is a deb
books of the company worth 5000 at 10% interest rate. Depreciation charged during the current period is 125 and the cape
the company is 225 . Working capital decreased by 50 during the current year. No additional borrowings or repayment was
company. The company's total shareholders' equity is 12000 and the cost of equity is 15%. Company's FCFF is expected t
10% for the next 3 years, then linearly decline to 5% in the next 5 years and remain costant at 5% forever. Company is no
cash on its books. Number of shares with the company are 500.
18. Current cash flow details of the company are as provided. Use these assumptions to estimate the FCFF for current pe
the cash flows based on a 3 stage FCFF model and compute the Intrisic Value per share as per the FCFF model. Current
should not be considered for the valuation purpose. Net Income for the company is 750, Tax rate is 35% and there is a deb
books of the company worth 5000 at 10% interest rate. Depreciation charged during the current period is 125 and the cape
the company is 225 . Working capital decreased by 50 during the current year. No additional borrowings or repayment was
company. The company's total shareholders' equity is 12000 and the cost of equity is 15%. Company's FCFF is expected t
10% for the next 3 years, then linearly decline to 5% in the next 5 years and remain costant at 5% forever. Company is no
cash on its books. Number of shares with the company are 500.

[10 Marks]
(a) 17.52
(b) 32.18
(c) 20.18
(d) 25.17
(e) Not Attempted

19. Calculate present value of annual infinite cash inflow of Rs 20,000 if rate of interest is 8.00%.
[1 Marks]
(a) 150000
(b) 245000
(c) 260000
(d) 250000
(e) Not Attempted

20. A company has a beta of 1.7. The risk free rate is 3% and market return is 9%. Calculate the cost of equity?
[1 Marks]
(a) 11%
(b) 12%
(c) 13%
(d) 9%
(e) Not Attempted

21. A company has a beta of 1.5. The risk free rate is 4% and market return is 8%. Calculate the cost of equity?
[1 Marks]
(a) 10%
(b) 12%
(c) 13%
(d) 9%
(e) Not Attempted

22. For a year, a company has an payable turnover ratio of 9. The accounts payable for the year is 6mn and the accounts
[1 Marks]
(a) 34mn
(b) 45mn
(c) 38mn
(d) 54mn
(e) Not Attempted

23. _______ is a market structures in which there exists a few sellers and several buyers.
[1 Marks]
(a) Oligopoly
(b) Bilateral Monopoly
(c) Monopsony
(d) Duopoly
(e) Not Attempted

24. What is the acid test ratio of company which has current asset worth 35 mn, current liability worth 20 mn and inventory
[1 Marks]
(a) 1.75
(b) 1.5
(c) 1
(d) 2
(e) Not Attempted

25. For non conventional cash flows, which of the following capital budgeting criteria should be preferred?
[1 Marks]
(a) NPV
(b) IRR
(c) Payback Period
(d) None of the above
(e) Not Attempted

26. Calculate the depreciation amount to be charged per year using the straight line depreciation method, if the cost of an
[1 Marks]
(a) Rs. 3,000
(b) Rs. 1,500
(c) Rs. 4,000
(d) Rs. 1,000
(e) Not Attempted

27. Given below are the details of Income Statement and Balance sheet of a company. Compute Ending cash balance for
company. Income Statement Details: Revenue =1200, COGS = 600, SG&A is 15% of Revenues, Depreciation=50, Debt=5
interest rate is 10%, Tax Rate is 30%. Balance Sheet Details: PPE, Gross = 2500, Accumulated Depreciation=1250, Cape
the company = 99, Current Assets = 750 , Decrease in current assets = 200 . Equity = 100, Retained Earning = 1500, Curr
Liabilities = 250, Decrease in currrent liabilities=25. The company started the year with cash=0. Debt and equity has remai
unchaged throughout the year.

[10 Marks]
(a) 650
(b) 450
(c) 350
(d) 550
(e) Not Attempted

28. During a period of steadily increasing prices which of the following methods of measuring the inventory is likely to resu
[1 Marks]
(a) Weighted Average Method
(b) FIFO Method
(c) LIFO Method
(d) Average Method
(e) Not Attempted
29. Calculate the present value (PV) following cash flow with a discount rate of 10%: 100,200,450,650. Assume the first ca
[1 Marks]
(a) 1050.45
(b) 1142.07
(c) 1224.64
(d) 1,038.25
(e) Not Attempted

30. Company ABC Ltd. is a Oil and Gas company. The operating profit of the company is Rs.1200 mn. The
outstanding debt of the company is Rs.5500 mn bearing an interest rate of 15%. The tax rate is 30%. The
dividend rate is 45%. The number of outstanding shares are 55 mn. Currently the stock is trading at Rs.55.
Calculate the P/E ratio of the company.

[5 Marks]
(a) 14.13
(b) 18.73
(c) 12.13
(d) 11.52
(e) Not Attempted
 _________

2000, Year-2 = 14500,

ffshore.The number of
e count for the
The offshore utilisation
lling rates per hour
days per year and 8
of the total employees
onsite and offshore as

000 bearing an interest rate of

00 and the tax rate is 30%. The
any. Consider the book value of
500, Tax rate = 35%, Interest rate = 15%, Outstanding debt = Rs.10000, Equity value = Rs.20000.

s at an average contribution of Rs.40/ strip and 150 strips/day of high budget

ected to grow by 5% every year for both the drugs. To operate a franchise , it
h (rental contract for 5 years, deposit of Rs.15,00,000 at the start) A one time
ired personnel costs are Rs 125,000/month.Wage inflation in the economy is
or the period.Tax rate in the economy is 35%. Tax losses cannot be carried
@13% interest rate). The remaining should be funded using equity. The debt is to
is expected to provide a return of 25%. Evaluate the business opportunity with a
he deposit will be refunded to the BOD Co.(Ignore depreciation) If BOD Co.
 or the period.Tax rate in the economy is 35%. Tax losses cannot be carried
@13% interest rate). The remaining should be funded using equity. The debt is to
is expected to provide a return of 25%. Evaluate the business opportunity with a
he deposit will be refunded to the BOD Co.(Ignore depreciation) If BOD Co.

ear-1 = 3000, Year-2 = 3500, Year-3 = 4500.

at a gross margin of 25% for segment-1 and
ained at 10% of the revenues for each year.
est rate of 9%. Debt will be repaid at the end of
% each year (assume depreciation remains
tatement of the company based on the given
osses if any, are not carried forward.

ate of 12% per annum for 7 years. What would be EMI amount? The interest rate on the loan is compounded monthly and that the EMI

rrent liability worth 10 mn and inventory worth 10 mn?

 estimate the FCFE for current period. Project the cash
he FCFE model. Current period should not be considered
preciation of 300 in the current year. Company has a debt
pany added new machinery worth 100 and working
equity for the company is 20%. Number of shares with
5 years and then expeected to remain constant at 5%

st.Year - 1 (Y1) is actual data and year-2 (Y2)

ue Projection : Y1 = 9000, Y2=11000, Y3 =
= 800, Y3 = 900 ; Tax : Y1 = 600, Y-2 = 650,
s are as follows: Cash : Y1 = 4800, Y2 =
: Y1 = 9000, Accounts payable : Y1 = 1500,
ed earnings : Y1 = 2800.No other line items
he same for all the projection years as that of
ets added at the start of the year and its
reholders’ Equity for the Year - 3?

estimate the FCFF for current period. Project

as per the FCFF model. Current period
Tax rate is 35% and there is a debt on the
current period is 125 and the capex done by
onal borrowings or repayment was done by the
%. Company's FCFF is expected to grow at
ant at 5% forever. Company is not having any
 estimate the FCFF for current period. Project
as per the FCFF model. Current period
Tax rate is 35% and there is a debt on the
current period is 125 and the capex done by
onal borrowings or repayment was done by the
%. Company's FCFF is expected to grow at
ant at 5% forever. Company is not having any

ulate the cost of equity?

ulate the cost of equity?

the year is 6mn and the accounts payable for the previous year was 4mn. Calculate the cost of goods sold of the company for the curre
liability worth 20 mn and inventory worth 5 mn?

uld be preferred?

reciation method, if the cost of an asset is Rs.21000 and the salvage value is Rs.1000. The useful life of the asset is 5 years.

Compute Ending cash balance for the

venues, Depreciation=50, Debt=500 and
mulated Depreciation=1250, Capex done by
00, Retained Earning = 1500, Current
ash=0. Debt and equity has remained

uring the inventory is likely to result in the highest gross profit ?

0,200,450,650. Assume the first cash flow comes at the beginning of the first year and the other cash flows come after that with an equa

s Rs.1200 mn. The

rate is 30%. The
s trading at Rs.55.
unded monthly and that the EMI is paid at the beginning of the month.
sold of the company for the current period?
of the asset is 5 years.
ows come after that with an equal interval of 1 year.
Sample Question Paper
QUESTION PAPER

1. When a unit change in supply results in a unit change in price, supply is referred to as _________
[1 Marks]
(a) Perfectly Elastic
(b) Perfectly Inelastic
(c) Unitary Elastic
(d) None of the above
(e) Not Attempted

2. Following are the details of an IT Company's revenue for the past 3 years - Year-1 = 12000, Year-2 =
14500, Year-3=17000, million INR. 40% of the revenue comes from onsite and remaining from
offshore.The number of employees working onsite is 15% of the total employee strength every
year.The employee count for the company each year is 5000, 6000 and 6800.The onsite utilisation is
87% for all 3 years.The offshore utilisation has been 2000 bps lower than onsite utilisation. Assuming
that the onsite and offshore billing rates per hour increase at 2% per year, project the revenues for the
next 3 years. Assume 250 working days per year and 8 hours of working for every day.Company
expects to add 500 employees every year.15% of the total employees would be onsite, others
offshore.Utiilisation rates are expected to remain same, for both onsite and offshore as that in year-3,
for the next 3 years.What is the revenue for Year-6?

[10 Marks]
(a) 18899
(b) 20618
(c) 23246
(d) 22020
(e) Not Attempted

3. Which of the following is a correct representation of formula in excel?

[1 Marks]
(a) =sum(AB)
(b) =sum(A1,B1)
(c) =sum(A1:B1)
(d) =sum(A1B1)
(e) Not Attempted

4. A company has a D/E of 0.6. As per the balance sheet, the outstanding debt is Rs.10000 bearing an
interest rate of 12%. The cash and cash equivalent is Rs.1500. The net income of the company is
Rs.5500 and the tax rate is 30%. The depreciation and amortization amount is Rs.2500. Calculate the
EV/EBITDA of the company. Consider the book value of equity same as the market value of equity of
the company.

[5 Marks]
(a) 5.48
(b) 4.42
(c) 3.49
(d) 2.17
(e) Not Attempted
5. _______ is a market structures in which there exists a single buyer, but many sellers.
[1 Marks]
(a) Oligopoly
(b) Monopoly
(c) Monopsony
(d) Duopoly
(e) Not Attempted

6. Calculate the ROE of the company with the use of following information: EBIT = Rs.4500, Tax rate = 35%, Interest rate
[1 Marks]
(a) 15%
(b) 14%
(c) 10%
(d) 8%
(e) Not Attempted

7. Which of the following is the most accurate statement regarding a Financial Model:
[1 Marks]
(a) Excel containing historical financial data
(b) Basic calculaition tool
(c) A decision making tool
(d) Excel spreadsheet with numbers
(e) Not Attempted

8. Increase in government spending causes ______________ of private investment.

[1 Marks]
(a) Inflation
(b) Unemployment
(c) Money Supply
(d) Crowding Out
(e) Not Attempted

9. _______ is a market structures in which there exists a single seller, and several buyers.
[1 Marks]
(a) Oligopoly
(b) Monopoly
(c) Monopsony
(d) Duopoly
(e) Not Attempted

10. BOD Co a franchise of Dr. Reddyy pharmacy, sells 200 strips/day of low budget drugs at an average contribution of R
budget drugs at an average contribution of Rs.75/ strip.Sales volume and average price are expected to grow by 5% ever
franchise , it needs to have a 1250 sqft space for retail shop with a lease rental of Rs.180 / sqft / month (rental contract for
the start) A one time renovation of the premises worth Rs.30,00,000 will need to be incurred at the start. Required personn
inflation in the economy is 8%. Other operational expenses are expected to be 30% of the contribution, generated for the p
Tax losses cannot be carried forward.The initial investment (deposit + renovation) can be funded by 60% bank loan (@13%
be funded using equity. The debt is to be repaid at the end of 5 years in lump sum. Other investment opportunity with BOD
25%. Evaluate the business opportunity with a project life of 5 years. After 5 years the franchise will be handed over to Dr.
refunded to the BOD Co.(Ignore depreciation) If BOD Co. invests in the project, what is the expected IRR?
inflation in the economy is 8%. Other operational expenses are expected to be 30% of the contribution, generated for the p
Tax losses cannot be carried forward.The initial investment (deposit + renovation) can be funded by 60% bank loan (@13%
be funded using equity. The debt is to be repaid at the end of 5 years in lump sum. Other investment opportunity with BOD
25%. Evaluate the business opportunity with a project life of 5 years. After 5 years the franchise will be handed over to Dr.
refunded to the BOD Co.(Ignore depreciation) If BOD Co. invests in the project, what is the expected IRR?

[10 Marks]
(a) 18.74%
(b) 19.74%
(c) 15.00%
(d) 17.00%
(e) Not Attempted

11. _______ is a market structures in which there exists a single seller, and single buyer.
[1 Marks]
(a) Oligopoly
(b) Bilateral Monopoly
(c) Monopsony
(d) Duopoly
(e) Not Attempted

12. Which amongst the following are applications of a financial model?

[1 Marks]
(a) Merger Valuation
(b) Project Appraisal
(c) Equity Research
(d) All of the above
(e) Not Attempted

13. Following are the details of revenues from 2 segments for a company. Segment-1: Year-1 = 3000, Year-2 =
3500, Year-3 = 4500. Segment-2: Year-1 = 1500, Year-2 = 1400, Year-3 = 2000. Both segments have worked at a
gross margin of 25% for segment-1 and 10% for segment-2 for all the 3 years. The selling and administration
expenses have remained at 10% of the revenues for each year. The company additionally has a debt of 3400
since Year-1 to Year-3, which has an interest rate of 9%. Debt will be repaid at the end of 5 years. Company has
fixed assets of 5500 for all 3 years. These were depreciated at 5% each year (assume depreciation remains same
for all 3 years (SLM)). The tax rate for the company is 35%.Complete the Income statement of the company based
on the given data and Compute the Net Profit for the year-3. Don't assume any interest income. Tax losses if any,
are not carried forward.

[10 Marks]
(a) 16
(b) -125
(c) -131
(d) 125
(e) Not Attempted

14. Mr.XYZ has purchased a car by borrowing a loan of Rs.750000 bearing an interest rate of 12% per annum for 7 years
[1 Marks]
(a) Rs. 13,108.46 -£13,108.46
(b) Rs. 11,820.40
(c) Rs. 12,642.26
(d) Rs. 11,360.67
(e) Not Attempted

15. What is the acid test ratio ratio of company which has current asset worth 25 mn, current liability worth 10 mn and inve
[1 Marks]
(a) 2.1
(b) 2
(c) 1.5
(d) 2.5
(e) Not Attempted

16. Current cash flow details of the company are as provided. Use these assumptions to estimate the FCFE for
current period. Project the cash flows based on a 2 stage FCFE model and compute the Intrisic Value per share as
per the FCFE model. Current period should not be considered for the valuation purpose. EBITDA for the company
is 1750. Company has charged a depreciation of 300 in the current year. Company has a debt of 1500 at 8%
interest rate. The tax rate of the company is 20%. During the year the company added new machinery worth 100
and working capital reduced by 50. Debt raised during the year was 150 and repaid was 275. Cost of equity for the
company is 20%. Number of shares with the company are 500. The company's FCFE is expected to increase by
15% for the next 5 years and then expeected to remain constant at 5% forever.

[5 Marks]
(a) 23.94
(b) 21.66
(c) 29.43
(d) 20.65
(e) Not Attempted

17. Following is the selected financial data of a Services Company provided to the analyst.Year - 1 (Y1) is actual data and
year-2 (Y2) and year-3 (Y3) are projections.Income Statement forecast details are as follows: Revenue Projection : Y1 = 90
Y2=11000, Y3 = 12500.COGS Projection Y1 = 6000, Y2 = 7250 , Y3 = 8900.Depreciation : Y1 = 700, Y2 = 800, Y3 = 900
Tax : Y1 = 600, Y-2 = 650, Y-3=700.No other item is present in the Income Statement.Balance Sheet forecast details are a
follows: Cash : Y1 = 4800, Y2 = 6031.94, Y3 = 7102.8, Accounts receivable : Y1 = 2500, Inventory : Y1 = 3000, PPE, Net :
= 9000, Accounts payable : Y1 = 1500, Debt : Y1 = 7500,Y2 = 7500, Y3 = 7500, Equity : Y1 = 7500, Y2= 7500, Y3=7500,
Retained earnings : Y1 = 2800.No other line items are present in the blanace sheet.DSO, DOH and Payable days are
expected to remain the same for all the projection years as that of year-1.Every year the company is going to add 1000 of
capex.Assume new capex gets added at the start of the year and its depreciation is considered in the above given
values.What is the total Liabilities and Shareholders’ Equity for the Year - 3?

[10 Marks]
(a) 25874
(b) 29514
(c) 24325
(d) 21825
(e) Not Attempted

18. Current cash flow details of the company are as provided. Use these assumptions to estimate the FCFF for current
period. Project the cash flows based on a 3 stage FCFF model and compute the Intrisic Value per share as per the FCFF
model. Current period should not be considered for the valuation purpose. Net Income for the company is 750, Tax rate is
35% and there is a debt on the books of the company worth 5000 at 10% interest rate. Depreciation charged during the
current period is 125 and the capex done by the company is 225 . Working capital decreased by 50 during the current year
No additional borrowings or repayment was done by the company. The company's total shareholders' equity is 12000 and
cost of equity is 15%. Company's FCFF is expected to grow at 10% for the next 3 years, then linearly decline to 5% in the
5 years and remain costant at 5% forever. Company is not having any cash on its books. Number of shares with the comp
are 500.
18. Current cash flow details of the company are as provided. Use these assumptions to estimate the FCFF for current
period. Project the cash flows based on a 3 stage FCFF model and compute the Intrisic Value per share as per the FCFF
model. Current period should not be considered for the valuation purpose. Net Income for the company is 750, Tax rate is
35% and there is a debt on the books of the company worth 5000 at 10% interest rate. Depreciation charged during the
current period is 125 and the capex done by the company is 225 . Working capital decreased by 50 during the current year
No additional borrowings or repayment was done by the company. The company's total shareholders' equity is 12000 and
cost of equity is 15%. Company's FCFF is expected to grow at 10% for the next 3 years, then linearly decline to 5% in the
5 years and remain costant at 5% forever. Company is not having any cash on its books. Number of shares with the comp
are 500.

[10 Marks]
(a) 17.52
(b) 32.18
(c) 20.18
(d) 25.17
(e) Not Attempted

19. Calculate present value of annual infinite cash inflow of Rs 20,000 if rate of interest is 8.00%.
[1 Marks]
(a) 150000
(b) 245000
(c) 260000
(d) 250000
(e) Not Attempted

20. A company has a beta of 1.7. The risk free rate is 3% and market return is 9%. Calculate the cost of equity?
[1 Marks]
(a) 11% 13.200%
(b) 12%
(c) 13%
(d) 9%
(e) Not Attempted

21. A company has a beta of 1.5. The risk free rate is 4% and market return is 8%. Calculate the cost of equity?
[1 Marks]
(a) 10%
(b) 12% 10.0%
(c) 13%
(d) 9%
(e) Not Attempted

22. For a year, a company has an payable turnover ratio of 9. The accounts payable for the year is 6mn and the accounts
[1 Marks]
(a) 34mn
(b) 45mn
(c) 38mn
(d) 54mn
(e) Not Attempted

23. _______ is a market structures in which there exists a few sellers and several buyers.
[1 Marks]
(a) Oligopoly
(b) Bilateral Monopoly
(c) Monopsony
(d) Duopoly
(e) Not Attempted

24. What is the acid test ratio of company which has current asset worth 35 mn, current liability worth 20 mn and inventory
[1 Marks]
(a) 1.75
(b) 1.5
(c) 1
(d) 2
(e) Not Attempted

25. For non conventional cash flows, which of the following capital budgeting criteria should be preferred?
[1 Marks]
(a) NPV
(b) IRR
(c) Payback Period
(d) None of the above
(e) Not Attempted

26. Calculate the depreciation amount to be charged per year using the straight line depreciation method, if the cost of an
[1 Marks]
(a) Rs. 3,000
(b) Rs. 1,500
(c) Rs. 4,000
(d) Rs. 1,000
(e) Not Attempted

27. Given below are the details of Income Statement and Balance sheet of a company. Compute Ending cash balance for
Income Statement Details: Revenue =1200, COGS = 600, SG&A is 15% of Revenues, Depreciation=50, Debt=500 and int
10%, Tax Rate is 30%. Balance Sheet Details: PPE, Gross = 2500, Accumulated Depreciation=1250, Capex done by the c
Current Assets = 750 , Decrease in current assets = 200 . Equity = 100, Retained Earning = 1500, Current Liabilities = 250
currrent liabilities=25. The company started the year with cash=0. Debt and equity has remained unchaged throughout the

[10 Marks]
(a) 650
(b) 450
(c) 350
(d) 550
(e) Not Attempted

28. During a period of steadily increasing prices which of the following methods of measuring the inventory is likely to resu
[1 Marks]
(a) Weighted Average Method
(b) FIFO Method
(c) LIFO Method
(d) Average Method
(e) Not Attempted
29. Calculate the present value (PV) following cash flow with a discount rate of 10%: 100,200,450,650. Assume the first ca
[1 Marks]
(a) 1050.45
(b) 1142.07 100
(c) 1224.64 200
(d) 1,038.25 450
(e) Not Attempted 650
1,142.07
30. Company ABC Ltd. is a Oil and Gas company. The operating profit of the company is Rs.1200 mn. The
outstanding debt of the company is Rs.5500 mn bearing an interest rate of 15%. The tax rate is 30%. The dividend
rate is 45%. The number of outstanding shares are 55 mn. Currently the stock is trading at Rs.55. Calculate the
P/E ratio of the company.

[10 Marks]
(a) 14.13
(b) 18.73
(c) 12.13
(d) 11.52
(e) Not Attempted
, Tax rate = 35%, Interest rate = 15%, Outstanding debt = Rs.10000, Equity value = Rs.20000.

at an average contribution of Rs.40/ strip and 150 strips/day of high

e expected to grow by 5% every year for both the drugs. To operate a
sqft / month (rental contract for 5 years, deposit of Rs.15,00,000 at
at the start. Required personnel costs are Rs 125,000/month.Wage
ontribution, generated for the period.Tax rate in the economy is 35%.
nded by 60% bank loan (@13% interest rate). The remaining should
vestment opportunity with BOD Co. is expected to provide a return of
hise will be handed over to Dr. Reddyy and the deposit will be
expected IRR?
ontribution, generated for the period.Tax rate in the economy is 35%.
nded by 60% bank loan (@13% interest rate). The remaining should
vestment opportunity with BOD Co. is expected to provide a return of
hise will be handed over to Dr. Reddyy and the deposit will be
expected IRR?

-1 = 3000, Year-2 =
ments have worked at a
nd administration
as a debt of 3400
years. Company has
eciation remains same
of the company based
me. Tax losses if any,

of 12% per annum for 7 years. What would be EMI amount? The interest rate on the loan is compounded monthly and that the EMI is p

nt liability worth 10 mn and inventory worth 10 mn?

 timate the FCFE for
isic Value per share as
ITDA for the company
ebt of 1500 at 8%
machinery worth 100
5. Cost of equity for the
pected to increase by

Year - 1 (Y1) is actual data and

s: Revenue Projection : Y1 = 9000,
Y1 = 700, Y2 = 800, Y3 = 900 ;
nce Sheet forecast details are as
ventory : Y1 = 3000, PPE, Net : Y1
= 7500, Y2= 7500, Y3=7500,
OH and Payable days are
mpany is going to add 1000 of new
red in the above given

timate the FCFF for current

ue per share as per the FCFF
he company is 750, Tax rate is
reciation charged during the
d by 50 during the current year.
reholders' equity is 12000 and the
n linearly decline to 5% in the next
umber of shares with the company
 timate the FCFF for current
ue per share as per the FCFF
he company is 750, Tax rate is
reciation charged during the
d by 50 during the current year.
reholders' equity is 12000 and the
n linearly decline to 5% in the next
umber of shares with the company

e the cost of equity?

e the cost of equity?

year is 6mn and the accounts payable for the previous year was 4mn. Calculate the cost of goods sold of the company for the current
bility worth 20 mn and inventory worth 5 mn?

d be preferred?

iation method, if the cost of an asset is Rs.21000 and the salvage value is Rs.1000. The useful life of the asset is 5 years.

mpute Ending cash balance for the company.

reciation=50, Debt=500 and interest rate is
on=1250, Capex done by the company = 99,
1500, Current Liabilities = 250, Decrease in
ained unchaged throughout the year.

ng the inventory is likely to result in the highest gross profit ?

00,450,650. Assume the first cash flow comes at the beginning of the first year and the other cash flows come after that with an equal in

s.1200 mn. The

e is 30%. The dividend
Rs.55. Calculate the
ded monthly and that the EMI is paid at the beginning of the month.
d of the company for the current period?
he asset is 5 years.
s come after that with an equal interval of 1 year.
Question

Following are the details of an IT Company's revenue for the past 3 years - Year-1 = 12000, Year-2 =
14500, Year-3=17000, million INR. 40% of the revenue comes from onsite and remaining from
offshore.The number of employees working onsite is 15% of the total employee strength every
year.The employee count for the company each year is 5000, 6000 and 6800.The onsite utilisation is
87% for all 3 years.The offshore utilisation has been 2000 bps lower than onsite utilisation. Assuming
that the onsite and offshore billing rates per hour increase at 2% per year, project the revenues for
the next 3 years. Assume 250 working days per year and 8 hours of working for every day.Company
expects to add 500 employees every year.15% of the total employees would be onsite, others
offshore.Utiilisation rates are expected to remain same, for both onsite and offshore as that in year-
3, for the next 3 years.What is the revenue for Year-6?
 Year-1 Year-2 Year-3 Year-4 Year-5
Revenue 12,000 14,500 17,000 18,615 20,288

Onsite 40% 40% 40% 40% 40%

Offshore 60% 60% 60% 60% 60%

Onsite Rev 4,800 5,800 6,800 7,446 8,115

Offshore Rev 7,200 8,700 10,200 11,169 12,173

Employees 5,000 6,000 6,800 7,300.0 7,800.0

Onsite 750 900 1,020 1,095.0 1,170.0
Offshore 4,250 5,100 5,780 6,205.0 6,630.0

Utilisation
Onsite 87% 87% 87% 87.00% 87.00%
Offshore 67.0% 67.0% 67.0% 67.00% 67.00%

Hours Billed
Onsite 1,305,000 1,566,000 1,774,800 1,905,300 2,035,800
Offshore 5,695,000 6,834,000 7,745,200 8,314,700 8,884,200

Billing Rate
Onsite 3,678 3,704 3,831 3,908 3,986
Offshore 1,264 1,273 1,317 1,343 1,370
Year-6
22,020

40%
60%

8,808
13,212

8,300.0
1,245.0
7,055.0

87.00%
67.00%

2,166,300
9,453,700

4,066
1,398
Question

A company has a D/E of 0.6. As per the balance sheet, the outstanding debt is Rs.10000 bearing an
interest rate of 12%. The cash and cash equivalent is Rs.1500. The net income of the company is
Rs.5500 and the tax rate is 30%. The depreciation and amortization amount is Rs.2500. Calculate the
EV/EBITDA of the company. Consider the book value of equity same as the market value of equity of
the company.
D/E 0.6 Equity 16666.666667

Debt 10000 12% Debt 10000

Cash 1500 Cash 1500

PAT 5500 EV 25166.666667

Tax 30% PAT 5500

PBT 7857.1428571
Depreciation 2500 Dep 2500
Int 1200

EBITDA 11557.142857

EV/EBITDA 2.1775854965
 0.6

5500
 Strips/Day Contribution
Low Budget Drug 200 40
High Budget Drug 150 75 Strips/Day
Growth y/y% 5% 5% Low Budget Drug
High Budget Drug
Area Rental/Month/sqft Deposit Contribution
Shop 1,250 180 1,500,000 Low Budget Drug
High Budget Drug
Rennovation Expens 3,000,000
Revenues
Personnel Costs 125,000 Rs/Month Lease Expenses
Inflation 8% Personnel Expenses
Other Expenses
Other Expenses 30% of Contribution EBIT
Tax Rate 35% Interest Expenses
EBT
Intial Cost 4,500,000 Tax
Debt 2,700,000 60% PAT
Interest Rate 13%
Equity 1,800,000 40% PAT
Cost of Equity 25% Initial Cost
Debt Raised / (Repaid
Deposit Refund
Cash Flow

NPV
IRR
Year-0 Year-1 Year-2 Year-3 Year-4 Year-5

200 210 221 232 243

150 158 165 174 182

40 42 44 46 49
75 79 83 87 91

7,026,250 7,746,441 8,540,451 9,415,847 10,380,971

2,700,000 2,700,000 2,700,000 2,700,000 2,700,000
1,500,000 1,620,000 1,749,600 1,889,568 2,040,733
2,107,875 2,323,932 2,562,135 2,824,754 3,114,291
718,375 1,102,508 1,528,716 2,001,525 2,525,946
351,000 351,000 351,000 351,000 351,000
367,375 751,508 1,177,716 1,650,525 2,174,946
128,581 263,028 412,200 577,684 761,231
238,794 488,480 765,515 1,072,841 1,413,715

238,794 488,480 765,515 1,072,841 1,413,715

(4,500,000)
2,700,000 (2,700,000)
1,500,000
(1,800,000) 238,794 488,480 765,515 1,072,841 213,715

(394,928)
15.00%
Question
BOD Co a franchise of Dr. Reddyy pharmacy, sells 200 strips/day of low budget drugs at
an average contribution of Rs.40/ strip and 150 strips/day of high budget drugs at an
average contribution of Rs.75/ strip.Sales volume and average price are expected to grow
by 5% every year for both the drugs. To operate a franchise , it needs to have a 1250 sqft
space for retail shop with a lease rental of Rs.180 / sqft / month (rental contract for 5
years, deposit of Rs.15,00,000 at the start) A one time renovation of the premises worth
Rs.30,00,000 will need to be incurred at the start. Required personnel costs are Rs
125,000/month.Wage inflation in the economy is 8%. Other operational expenses are
expected to be 30% of the contribution, generated for the period.Tax rate in the
economy is 35%. Tax losses cannot be carried forward.The initial investment (deposit +
renovation) can be funded by 60% bank loan (@13% interest rate). The remaining should
be funded using equity. The debt is to be repaid at the end of 5 years in lump sum. Other
investment opportunity with BOD Co. is expected to provide a return of 25%. Evaluate
the business opportunity with a project life of 5 years. After 5 years the franchise will be
handed over to Dr. Reddyy and the deposit will be refunded to the BOD Co.(Ignore
depreciation) If BOD Co. invests in the project, what is the expected IRR?
Question

Following are the details of revenues from 2 segments for a company. Segment-1: Year-1 = 3000,
Year-2 = 3500, Year-3 = 4500. Segment-2: Year-1 = 1500, Year-2 = 1400, Year-3 = 2000. Both
segments have worked at a gross margin of 25% for segment-1 and 10% for segment-2 for all the 3
years. The selling and administration expenses have remained at 10% of the revenues for each year.
The company additionally has a debt of 3400 since Year-1 to Year-3, which has an interest rate of 9%.
Debt will be repaid at the end of 5 years. Company has fixed assets of 5500 for all 3 years. These
were depreciated at 5% each year (assume depreciation remains same for all 3 years (SLM)). The tax
rate for the company is 35%.Complete the Income statement of the company based on the given
data and Compute the Net Profit for the year-3. Don't assume any interest income. Tax losses if any,
are not carried forward.
 Year-1 Year-2 Year-3

Seg-1 3,000 3,500 4,500

Seg-2 1,500 1,400 2,000
Total Revenue 4,500 4,900 6,500

Seg-1 2,250 2,625 3,375 75% 25%

Seg-2 1,350 1,260 1,800 90% 10%
Total Costs 3,600 3,885 5,175

Gross Profit 900 1,015 1,325

SG&A 450 490 650 10%

EBITDA 450 525 675

DA 275 275 275 5500 5%
EBIT 175 250 400
Interest Expense 306 306 306 3400 9.00%
PBT (131) (56) 94
Tax - - 33 35%
Net Income (131) (56) 61
61
Question

Current cash flow details of the company are as provided. Use these assumptions to estimate the
FCFE for current period. Project the cash flows based on a 2 stage FCFE model and compute the
Intrisic Value per share as per the FCFE model. Current period should not be considered for the
valuation purpose. EBITDA for the company is 1750. Company has charged a depreciation of 300 in
the current year. Company has a debt of 1500 at 8% interest rate. The tax rate of the company is
20%. During the year the company added new machinery worth 100 and working capital reduced by
50. Debt raised during the year was 150 and repaid was 275. Cost of equity for the company is 20%.
Number of shares with the company are 500. The company's FCFE is expected to increase by 15% for
the next 5 years and then expeected to remain constant at 5% forever.
 Year-0 Year-1 Year-2 Year-3 Year-4 Year-5
EBITDA 1,750.0
DA 300.0
Int 120.0 1500 8%
PBT 1,330.0
PAT 1,064.0 20%

Dep 300
Capex (100)
WC 50
Debt (125)
FCFF 1,189 1,367 1,572 1,808 2,080 2,392
15% 15% 15% 15% 15%

WACC
kd 0.064 wd 0 D 1500
ke 20% we 1 E 3500
D+E 5000
WACC 0.2
1 2 3 4 5
PV of FCFE 1,139.46 1,091.98 1,046.48 1,002.88 961.09
6,727.64
Equity 11969.5328193319
NoS 500
Intrinsic Value 23.9390656386638
Year-6 Year-7 Year-8

2,511
5.00%
 Actual Projection Question
Year-1 Year-2 Year-3 Following is the selected financial data of a Serv
actual data and year-2 (Y2) and year-3 (Y3) are p
follows: Revenue Projection : Y1 = 9000, Y2=110
Revenue 9,000.0 11,000.0 12,500.0 7250 , Y3 = 8900.Depreciation : Y1 = 700, Y2 = 8
COGS 6,000.0 7,250.0 8,900.0 other item is present in the Income Statement.B
Depreciation 700.0 800.0 900.0 = 4800, Y2 = 6031.94, Y3 = 7102.8, Accounts rec
Y1 = 9000, Accounts payable : Y1 = 1500, Debt :
Tax 600.0 650.0 700.0 Y2= 7500, Y3=7500, Retained earnings : Y1 = 280
Net Income 1,700.0 2,300.0 2,000.0 sheet.DSO, DOH and Payable days are expected
that of year-1.Every year the company is going t
added at the start of the year and its depreciatio
Cash 4,800.0 6,031.9 7,102.8 total Liabilities and Shareholders’ Equity for the
Accounts Receivable 2,500.0 3,055.6 3,472.2
Inventory 3,000.0 3,625.0 4,450.0
PPPE, Net 9,000.0 9,200.0 9,300.0
TA 19,300.0 21,912.5 24,325.0

Accounts Payable 1,500.0 1,812.5 2,225.0

Debt 7,500.0 7,500.0 7,500.0
Equity 7,500.0 7,500.0 7,500.0
Retained Earnings 2,800.0 5,100.0 7,100.0
TL & Sh Eq 19,300.0 21,912.5 24,325.0
- - -
DSO 101.388889 101.388889 101.388889
DOH 182.5 182.5 182.5
Payable Days 91.25 91.25 91.25
ed financial data of a Services Company provided to the analyst.Year - 1 (Y1) is
(Y2) and year-3 (Y3) are projections.Income Statement forecast details are as
ction : Y1 = 9000, Y2=11000, Y3 = 12500.COGS Projection Y1 = 6000, Y2 =
eciation : Y1 = 700, Y2 = 800, Y3 = 900 ; Tax : Y1 = 600, Y-2 = 650, Y-3=700.No
n the Income Statement.Balance Sheet forecast details are as follows: Cash : Y1
Y3 = 7102.8, Accounts receivable : Y1 = 2500, Inventory : Y1 = 3000, PPE, Net :
ayable : Y1 = 1500, Debt : Y1 = 7500,Y2 = 7500, Y3 = 7500, Equity : Y1 = 7500,
tained earnings : Y1 = 2800.No other line items are present in the blanace
ayable days are expected to remain the same for all the projection years as
ar the company is going to add 1000 of new capex.Assume new capex gets
he year and its depreciation is considered in the above given values.What is the
areholders’ Equity for the Year - 3?
Question

Current cash flow details of the company are as provided. Use these assumptions to estimate the
FCFF for current period. Project the cash flows based on a 3 stage FCFF model and compute the
Intrisic Value per share as per the FCFF model. Current period should not be considered for the
valuation purpose. Net Income for the company is 750, Tax rate is 35% and there is a debt on the
books of the company worth 5000 at 10% interest rate. Depreciation charged during the current
period is 125 and the capex done by the company is 225 . Working capital decreased by 50 during
the current year. No additional borrowings or repayment was done by the company. The company's
total shareholders' equity is 12000 and the cost of equity is 15%. Company's FCFF is expected to
grow at 10% for the next 3 years, then linearly decline to 5% in the next 5 years and remain costant
at 5% forever. Company is not having any cash on its books. Number of shares with the company are
500.
 Year-0 Year-1 Year-2 Year-3 Year-4 Year-5
NI 750
PBT 1,154 35%
Int 500 5000 10%
EBIT 1,654
NOPAT 1,075 35%

Dep 125
Capex (225)
WC 50
FCFF 1,025 1,128 1,240 1,364 1,487 1,606
10% 10% 10% 9.00% 8.00%

WACC
kd 0.065 wd 0.2941176 D 5000
ke 15% we 0.7058824 E 12000
D+E 17000
WACC 0.125
1 2 3 4 5
PV of FCFF 1002.222222 979.95062 958.17394 928.36408 891.22951784

EV 17587.8359361385
Debt 5000
Equity 12587.8359361385
NoS 500
Intrinsic Value 25.1756718722771
Year-6 Year-7 Year-8

1,718 1,822 1,913

7.00% 6.00% 5.00%

6 7 8
847.6583 798.68248 745.43699
11181.555 5%
Question

Given below are the details of Income Statement and Balance sheet of a company. Compute Ending
cash balance for the company. Income Statement Details: Revenue =1200, COGS = 600, SG&A is 15%
of Revenues, Depreciation=50, Debt=500 and interest rate is 10%, Tax Rate is 30%. Balance Sheet
Details: PPE, Gross = 2500, Accumulated Depreciation=1250, Capex done by the company = 99,
Current Assets = 750 , Decrease in current assets = 200 . Equity = 100, Retained Earning = 1500,
Current Liabilities = 250, Decrease in currrent liabilities=25. The company started the year with
cash=0. Debt and equity has remained unchaged throughout the year.
 Year-1

Revenue 1,200
COGS 600
GP 600
SG&A 180 15%
EBITDA 420
DA 50
EBIT 370
Int 50 10% 500
EBT 320
T 96 30%
PAT 224

Current Assets 750 200 decrease

PPE,Gross 2,500 PAT 224
Acc Depreciation 1,250 Dep 50
PPe, Net 1,250 CA Decrease 200
Cash 350 CL Increase (25)
TA 2,350 CFO 449

Current Liabilities 250 -25 decrease Capex (99)

Debt 500 10% Net Cash 350
Equity 100
Retained Earning 1,500 BOP Cash -
TL 2,350 EOP Cash 350

-
Question

Company ABC Ltd. is a Oil and Gas company. The operating profit of the company is Rs.1200 mn. The
outstanding debt of the company is Rs.5500 mn bearing an interest rate of 15%. The tax rate is 30%.
The dividend rate is 45%. The number of outstanding shares are 55 mn. Currently the stock is trading
at Rs.55. Calculate the P/E ratio of the company.
EBIT 1200 EBIT

Debt 5500 15% Int

Tax 30% EBT

Dividend Payout 45% Tax

NOS 55 PAT

CMP 55 EPS

P/E
 1200

825

375

112.5

262.5

4.7727273

11.52381