Corporate Finance
December 2022 Examination
1. Refer the published Balance Sheet of any listed Company. Identify its sources of funds.
Explain any 4 in brief. (Balance Sheet need not to be copied or pasted in the answer) Compare and rank the sources identified with respect to their cost to the company (high, low). Discuss your observation (10 Marks)
Ans 1.
Introduction
Bharti Airtel is one of the leading firms in the telecom industry, and it has been running its operations in the country since 1995. Bharti airtel is also known as airtel and is a multi-national company running its operations in 18 different nations, including South Africa and south Asia.
Bharti airtel was noted on the Indian stock exchange in 2002, and its shares were detailed at a 40 percent cost. Investors earned a great deal of cash back after that.
A firm requires raising funds at minimum interest rates to include revenues in its pockets. Raising money at more excellent rates of
Q2. M/s Priya Industries Ltd. is evaluating 2 options of investments. Each one has the following mentioned Cash Flows. Rate of Interest 5%
Evaluate the projects using: i) Pay-back period
ii) NPV
iii) IRR
(Show the calculations for each method.)
Which option you as the Chief Finance Officer of the Company would you select? Give reasons (10 Marks
Year A B
0 -40000 -50000
1 5000 8500
2 12000 15000
3 10000 12000
4 12500 12300
5 10500 10500
Ans 2.
Introduction
Investment is a procedure of comprehensive research and a creative eye. Huge organizations invest their profits further in equities or by getting other companies. This helps them earn compounded revenues, permitting them to create additional income via various other sources. Selecting the basis for investment is a challenging task. Many choices have to be evaluated, and the business has to select the best out of them all.
There are various methods to pick the most
3a. Sunil is valuating 2 investment proposals:
i) Invest Rs. 3 lacs for 5 years earn an interest of 8% compounded quarterly.
ii) Investment of Rs. 20,000 per year for 5 years @ 10% compounded quarterly.
Which option should he go for and why? (5 Marks)
Ans 3a.
Introduction
Investing is when a certain amount of cash or money is bought for some kind of asset to gain added profits on the money invested in the long run. When a person purchases an investment, he buys it to develop riches for him. Investing a certain amount of money every month or year in a hedge fund, real estate, or mutual fund can give huge returns in the future. Investing is the most convenient way to become rich if an individual middle-class desires to be rich and well-off.
Concepts and applications
Q3b. Sanjana has a debenture of Par-value Rs. 100/- @ 6%. Calculate its current yield if:
(5 Marks)
i) Market Price is Rs. 98.20 ii) Market Price is Rs. 102.00
What inference can you draw from this about the relation between Market price and yield?
An 3b.
Introduction
A debenture is likewise an asset or a kind of bond additionally. It is a financial obligation instrument that is collaterally unsafe. Debentures are issued on the backing of the reputation and goodwill of the provider. It is one of the ongoing financial obligations an individual can use for funding functions.
Concepts and applications
1. Current market price= 98.20
par value = 100
Interest rate = 6%
Current yield= annual interest payment/deb current price
= 106/98.20
