Question 1)a)
The following data are available for the firm A:
Quantity : 3,000 units
Selling price : Rs.100/unit
Variable cost : Rs.40/unit
Fixed costs : Rs.1,00,000
Interest Paid : Rs.40,000
Preferred Dividend : Rs.10,000
Number of equity shares: 15,000
Tax rate : 60%
Compute:
(i) Earnings per share
(ii) Operating breakeven point
(iii) Financial breakeven point
(iv) Overall breakeven point. What equal series of payments are necessary to repay a loan amount of Rs. 1, 00,000 in 5 years at 12% per year compounded quarterly, with annual payments?
Question 2)a) A chemical company has been growing at a rate of 18% per year in recent years. This abnormal growth rate is expected to continue for another 4 years. Then it is likely to grow at the normal rate of 6%. The required rate of return on the shares by the investment community is 12% and the dividend paid per share last year was Rs.3. At what price would you, as an investor, be ready to buy the shares of this company now and at the end of years 1, 2, 3 and 4 respectively?
b) Compare journal and the ledger books of the double entry system of accounting.
c) A Rs.1, 000 par value bond, bearing a coupon rate of 12% will mature after 10 years. Interest payable is semi-annually. Compute the value of the bond if the required rate of return is 16%.
d) Describe the significant turnover ratios and profit margin ratios.