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Q.2 What are the factors that affect the financial plan of a company?
Q.3 Show the relationship between required rate of return and coupon rate on the value
of a bond.
Q.5 The cash flows associated with a project are given below:
0 (100,000)
1 25000
2 40000
3 50000
4 40000
5 30000
Q6. A company’s earnings and dividends are growing at the rate of 18% pa. The growth
rate is expected to continue for 4 years. After 4 years, from year 5 onwards, the growth
rate will be 6% forever. If the dividend per share last year was Rs. 2 and the investors
required rate of return is 10% pa, what is the intrinsic price per share or the worth of one
share.
[Type text] [Type text] Feb 2010
The cost of the project is Rs.200 million, which consists of Rs. 150 million in plant a
machinery and Rs.50 million on net working capital. The entire outlay will be incurred in the
beginning. The life of the project is expected to be 5 years. At the end of 5 years, the fixed
assets will fetch a net salvage value of Rs. 48 million ad the net working capital will be
liquidated at par. The project will increase revenues of the firm by Rs. 250 million per year.
The increase in costs will be Rs.100 million per year. The depreciation rate applicable will be
25% as per written down value method. The tax rate is 30%. If the cost of capital is 10%
Q.6 Given the following information, what will be the price per share using the Walter
model.