EMPI BUSINESS SCHOOL

End Term - March, 2022

PGDM – SEMESTER: 2
Sub: Corporate Finance (Core)
MAX MARKS: 60 MAX TIME: 3HRS 20 MINS.

Section – ‘A” (Total Marks: 30) Answer both the questions. Each question is of 15 marks

Q1) What are the different parameters which impact financing decisions of a company? (15 marks)

Q2)

Explain about FCF – Free Cash Flow to Firm. (10 marks)

Calculate FCF – Free Cash Flow to Firm. (5 marks)

Particulars In INR Lakhs

EBIT 16, 000

Tax rate 25%
Depreciation 2, 000
Capex 1, 200
Change in working capital 400

Section – B (Total Marks: 30) Answer all the questions. Each question is of 10 marks.

Q1)
Define Gordon Growth model. (6 marks)
Calculate share price of firm. (4 marks)
Expected Dividends one year from now Rs 75
Required rate of return for equity investors 17%
Growth rate in dividends forever 3%

Q2) Investors will adjust for risk, by adjusting their allocations to different assets such as T- Bills or
Treasury Bills, Market portfolio of Equity, etc. Explain. (5 marks)

What are different risks faced by firms. (5 marks)

Q3)

Calculate EV - Enterprise Value of the new company with the below details. (5 marks)
Particulars

EV/EBITDA of Company A of software industry 10

EV/EBITDA of Company B of software industry 11
EV/EBITDA of Company C of software industry 7
EBITDA of a new company is Rs 1 Crore

Calculate EV - Enterprise Value of the new company with the below details. (5 marks)
Particulars
Market Capitalization/Net Sales of Company A 2
of pharma industry
Market Capitalization/Net Sales of Company B 4
of pharma industry
Market Capitalization/Net Sales of Company C 3
of pharma industry
Net sales of a new company is Rs 5 Crore
Debt of new company Rs 2 Crore
Cash of new company Rs 0.5 Crore