Question 1: Explain the methods employed for cash management.
Question 2: State the approach used for the valuation of bonds?
Question 3: Explain the considerations while estimating the working capital.
Question 4: Bring out the determinants of optimum capital structure.
Question 5: A small-sized company is considering methods to finance its establishment. Initially Es. 2,00,000 will be required. The company is considering two proposals for the purpose:
a) Issue 10%debentures of Rs. 1,00,000 and issue of 1,000 equity shares of Rs. 100 each.
b) Issue of 2,000 equity shares of Rs. 100 each. The corporate tax rate is 50%.
Calculate the indifference point of the above proposed two financial plans.
Show that indifference point calculated in (a) above is correct.
c) Calculate EPS under the two proposed financial plans if EBIT is Rs. 30,000 and Rs. 40,000. How do you describe the differences in your results?
d) Make an EBIT-EPS chart for EBlT ranges of Rs. 20,000 to 80,000 with an interval of Rs. 10,000.