Narate the different approaches to financing of working

capital requirements.
Answer any four questions from the following: 4x10 =40
What are the factors that detemine the Working Capital
requirement of a company?

D. Alpha co. has 1,00,000 shares selling at ?. 100 per share.

The company is planning pay dividend of Rs. 12 per
to
share at the end of the financial year. The
company's
profits tor the year are Rs. 40,00,000 and it wishes to
make new investments of Rs. 24,00,000. The cost of
capital is 15°o. Using Modigliani-Miller model, show that
the Dividend payment does not affect the value of the

company.

C Calculate weighted average cost of capital from the

following infornnation:

Capital structure of AB Lid: (Rs. Thousand)

Equity capital: Shares of Rs. 10 each fully paid 100

Reserves (general) S0

Long term debt 100

250