Dear students, get fully solved assignments by professionals
Do send your query at :
help.mbaassignments@gmail.com
or call us at : 08263069601
(Plagiarism proofed assignments available with 100% surety and refund)
NMIMS Global Access
Course: Corporate Finance
Internal Assignment Applicable for December 2023 Examination
Assignment Marks: 30
Question. 1) Calculate the WACC for M/s Antara Limited with the following information: (10 marks)
Capital Structure BV Share Capital 50,00,000
Retained Earnings 2,50,000
Debentures 15,00,000 Bank Loan 2,00,000
Share price of M/s Antara Limited at the beginning of the year was Rs. 50 and end of the year was Rs. 55 per share. Dividend declared was Rs. 5. Beta of the Company was pegged at 0.6. M/s Antara had floated its Debentures at 8% fixed interest for 5 years. The bank had extended a loan on floating rate basis. Interest paid during the year was Rs. 10000. Government securities are earning a return of 4% currently.
Answer : To calculate the Weighted Average Cost of Capital (WACC) for M/s Antara Limited, you need to determine the cost of each component of the capital structure and then compute the weighted average based on their respective proportions.
The components of the capital structure are as follows:
• Equity (Share Capital and
Question. 2) Calculate the Gross and the Net Operating Cycle for Vishal & Co. Ltd. using thefollowing information. (Assume 360 days in a year). (10 marks)
Description Amount in Rs.
Opening Balances
Raw Material 200,000
Work in Progress (WIP) 60,000
Finished Goods 600,000
Debtors 250,000
Creditors 550,000
Closing Balances
Raw Material 300,000
Work in Progress (WIP) 65,000
Finished Goods 725,000
Debtors 215,000
Creditors 575,000
Annual Transactions
Annual Purchase of Raw Material 3,200,000
Manufacturing Expenses 550,000
Selling & Distribution Costs 300,000
Sales 4,480,000
Answer : To calculate the Gross and Net Operating Cycle for Vishal & Co. Ltd., we’ll first determine the various components of the cycle.
Gross Operating Cycle:
The Gross Operating Cycle represents the time it takes for a company to acquire raw materials, convert them into finished goods, and sell those goods. It is calculated as:
Gross Operating Cycle = (Average Inventory Holding Period) + (Average Receivables Collection Period)
1. Average Inventory Holding Period (AIHP): AIHP represents the average time raw materials, work in progress (WIP), and finished goods are held before being sold. It is calculated as the average of the holding period of each component.
• AIHP for Raw Material = (Raw
Question. 3) a) What should be the amount to be invested:
i) To receive Rs. 2,00,000 per annum in perpetuity at an interest rate of 8%.
ii) In addition to conditions of point (i) above, if a growth rate of 3% is expected every year.
To receive Rs. 4,00,000 per annum in perpetuity at an interest rate of 5%. (5 marks)
Answer : To calculate the amount to be invested to receive a perpetuity, you can use the perpetuity formula, which is:
Amount to be Invested = Annual Payment / Discount Rate
Where:
• Annual Payment is the amount you want to receive annually.
• Discount Rate is the interest rate.
Let’s calculate the amounts to be invested
Question. b) Calculate the current ratio and Acid Test Ratio with the following information (5 marks)
Account Amount (in Rs.)
Debtors 500,000
Cash and Bank 200,000
Inventory 400,000
Trade Payables 150,000
Bank OD 50,000
Answer : To calculate the current ratio and acid-test ratio (also known as the quick ratio), you need to use the following formulas:
Current Ratio: Current Ratio = Current Assets / Current Liabilities
Acid-Test Ratio (Quick Ratio): Quick Ratio = (Current Assets – Inventory) / Current Liabilities
Let’s use the provided information to calculate both ratios:
• Debtors: Rs. 500,000
Dear students, get fully solved assignments by professionals
Do send your query at :
help.mbaassignments@gmail.com
or call us at : 08263069601
(Plagiarism proofed assignments available with 100% surety and refund)