SOLUTIONS-PANKAJ SEN

Q 4)
base NAV

Rs 10

Initial
allowable
expenses in a
close ended
NFO

6%

period opf NFO

5 YEARS

Weekly expenses

{.60/260}

NAV
NAV

10-{.60/260}
9.9977

Q 5)

8%

9%

10%

11%

Int rate 9% from Apr-2004/10% from Jun-2005/ 11% from Apr 2006
Balance
EMI
Int
Principal
Jul-04
150000
2003
Aug-04 148,370
2,630
1000
1,630
Sep-04 146,729
2,630
989
1,641
Oct-04 145,077
2,630
978
1,652
Nov-04 143,415
2,630
967
1,663
Dec-04 141,741
2,630
956
1,674
2004
Jan-05 140,056
2,630
945
1,685
Feb-05 138,359
2,630
934
1,696
Mar-05 136,652
2,630
922
1,708
Apr-05 134,933
2,630
911
1,719
May-05 133,315
2,630
1012
1,618
Jun-05 131,685
2,630
1000
1,630
Jul-05 130,042
2,630
988
1,642
Aug-05 128,387
2,630
975
1,655
Sep-05 126,720
2,630
963
1,667
Oct-05 125,041
2,630
950
1,680
Nov-05 123,349
2,630
938
1,692
Dec-05 121,644
2,630
925
1,705
2005
Jan-06 119,926
2,630
912
1,718
Feb-06 118,195
2,630
899
1,731
Mar-06 116,452
2,630
886
1,744
Apr-06 114,695
2,630
873
1,757
May-06 112,926
2,630
860
1,770
Jun-06 111,142
2,630
847
1,783
Jul-06 109,439
2,630
926
1,704
Aug-06 107,721
2,630
912
1,718
Sep-06 105,988
2,630
898
1,732
Oct-06 104,242
2,630
883
1,747
Nov-06 102,480
2,630
869
1,761
Dec-06 100,704
2,630
854
1,776
2006
Jan-07
98,913
2,630
839
1,791
Feb-07
97,108
2,630
824
1,806
Mar-07
95,287
2,630
809
1,821
Apr-07
93,451
2,630
794
1,836 Int
May-07
91,678
2,630
857
1,773 Prin
Jun-07
89,888
2,630
840
1,790
Jul-07
88,082
2,630
824
1,806
Aug-07
86,259
2,630
807
1,823

9173
22,262

2007

2008

2009

Sep-07
Oct-07
Nov-07
Dec-07
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
Nov-09
Dec-09
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Jun-10
Jul-10
Aug-10
Sep-10
Oct-10
Nov-10
Dec-10

84,420
82,564
80,691
78,800
76,893
74,968
73,025
71,064
69,086
67,089
65,074
63,040
60,988
58,917
56,827
54,718
52,590
50,442
48,274
46,087
43,879
41,652
39,403
37,135
34,845
32,534
30,203
27,850
25,475
23,078
20,660
18,219
15,756
13,271
10,762
8,231
5,677
3,099
497
(0)

2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
2,630
502

Q 7)
V=D1/(K-G)
G=Retention Ratio * ROE
Retention Ratio= 1-Divident Payout ratio
Growth Rate= (1-Divident Payout Ratio) * ROE
G=(1-0.3) * 0.2
ie
0.14
Value of Share=
3/(0.16-0.14)
Q 8)
Computation of income from house property
Rent from Siliguri house
A
Fair Rent
B
Municipal Value

24000
25200

150

791
774
757
740
722
705
687
669
651
633
615
597
578
559
540
521
502
482
462
443
422
402
382
361
340
319
298
277
255
234
212
189
167
144
122
99
75
52
28
5

1,839
1,856
1,873
1,890
1,908
1,925
1,943
1,961
1,979
1,997
2,015
2,033
2,052
2,071
2,090
2,109
2,128
2,148
2,168
2,187
2,208
2,228
2,248
2,269
2,290
2,311
2,332
2,353
2,375
2,396
2,418
2,441
2,463
2,486
2,508
2,531
2,555
2,578
2,602
497

C
D

Std Rent
Actual Rent

24000
22000

E

higher of FRV/MV limit to Std Rent

24000

less

Higher of D and E
Municipal tax paid on Siliguri house

24000
1150
22850
6855
9000
6995

less
Std Deduction u/s 24
less
interest paid on housing loan u/s 24
Total Income from house property

Q 14)
Independent projects accept all with positive NPVs or Irrs greater than cost of
capital. NPV somputation is easy--treat cash flows as an annuity.
NPV A

N=5

I=12

NPV A=

18024-15000=Rs. 3024

NPV B

N=4

NPV B=

22780-20000=Rs. 2780

I=12

PMT=5000 FV=0

PMT=7500 FV=0

Q 15)
B Accept the project with the highest NPV

CPT PV =

-18024

CPT PV=

-22780

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