MMPF-002 Capital Investment and Financing Decisions Solved Assignment 2024-2025

MMPF-002 Capital Investment and Financing Decisions Solved Assignment 2024-2025

ASSIGNMENT
Course Code : MMPF-002
Course Title : Capital Investment and Financing Decisions
Assignment Code : MMPF-002/TMA/ JULY/2024
Coverage : All Blocks

1. ABC Ltd. has the following book value capital structure as on March, 31, 2024.
Equity share capital (2,00,000 shares) 60,00,000
10% preference shares 10,00,000
12% Debentures 30,00,000
100,00,000
The equity share of the company sells at Rs. 30. It is expected that the company will pay
next year a dividend of Rs. 3 per equity share which is expected to grow at 5% p.a.
forever, Assume 40% corporate tax rates.
Based on the above information calculate.
(a) Weighted average cost of capital (WACC) of the company based on the existing
capital structure.
(b) Compute the new WACC if the company raises an additional 40 Lakh debt by issuing
13% debentures. This would result in increasing the expected dividend to Rs. 3.60
and leave the growth rate unchanged but the price of the equity share will fall to Rs.
24.
2. How are the Cash Flows for Capital Budgeting estimated? Describe the various methods
used for evaluating investment proposals. .
3. What do you understand by Certainty and Risk? Describe the techniques used for
measurement of Project Risk.
4. Explain the following:
(a) Leasing and Hire Purchase. Discuss the difference between these two.
(b) Asset Securitization
5. What is Financial Engineering? Discuss the factors contributing to Financial
Engineering.

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