NMIMS Corporate Finance Solved Assignments June 2022

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NMIMS Corporate Finance Solved Assignments June 2022

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NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Corporate Finance
Internal Assignment Applicable for June2022 Examination

Assignment Marks: 30

Instructions:
 All Questions carry equal marks.
 All Questions are compulsory
 All answers to be explained in not more than 1000 words for question 1 and 2 and for
question 3 in not more than 500 words for each subsection. Use relevant examples,
illustrations as far as possible.
 All answers to be written individually. Discussion and group work is not advisable.
 Students are free to refer to any books/reference material/website/internet for attempting
their assignments, but are not allowed to copy the matter as it is from the source of
reference.
 Students should write the assignment in their own words. Copying of assignments from
other students is not allowed.
 Students should follow the following parameter for answering the assignment questions.

1. MCARTECH Pvt. Ltd. is considering two mutually exclusive capital investments. The
project’s expected net cash flows are as follows:
For Theoretical Answer
Assessment Parameter Weightage
Introduction 20%
Concepts and Application
related to the question
60%
Conclusion 20%
For Numerical Answer
Assessment Parameter Weightage
Understanding and usage
of the formula
20%
Procedure / Steps 50%
Correct Answer &
Interpretation
30%
NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Corporate Finance
Internal Assignment Applicable for June2022 Examination
Expected Cash Flows
Year Project A Project B
0 -500 -875
1 100 150
2 110 200
3 120 250
4 175 375
5 240 530
6 300 680
a. If you were told that each project’s cost of capital was 12%, which project should be
selected using the NPV criteria?
b. What is the profitability index for each project if the cost of capital is 12%?
c. What is the regular payback period for these two projects?
(10 Marks)
2. Assume that you plan to take a housing loan with a tenor of 20 year. The loan has to be
repaid in equal monthly installments. Considering that the loan amount is Rs. 50 lakhs
and the interest rate on loan is 9% p.a., what would be the equated monthly installment
(EMI)? (10 Marks)
3. LT India Ltd has the following capital structure, which it considers optimal:
Debt 35%
Equity shares 65%
Total 100%
Applicable tax rate for the company is 25%. Risk free rate of return is 6%, average equity
market investment has expected rate of return of 12%. The company’s beta is 1.10. Debt
will bear an interest rate of 9% p.a.
NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Corporate Finance
Internal Assignment Applicable for December 2021 Examination
Calculate
a. component cost of debt and equity shares assuming that the company does not issue
any additional equity shares. (5 Marks)
b. Weighted Average Cost of Capital (WACC). (5 Marks)
**********

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