FIN622 GDB Solution

FIN622 GDB Solution

WACC (when debt-equity ratio is 0.5) = 0.09%

WACC (when debt-equity ratio is 1.0) = 0.08%

WACC (when debt-equity ratio is 2.0) = 0.07%

Trend of WACC with increasing D/E ratio = Decreasing

FIN 630 GDB Solution

FIN 630 GDB Solution

Semester Spring,2011

SNT Inc. is a Public Limited Company. In the following year, one of the objectives of Company is to make its shares more attractive for the investors by increasing the affordability of its shares for the lower income investors. Currently Company’s share is selling for Rs. 200 per share (which is considered an expensive share by the investors) and company is having 6, 000 outstanding shares. Now Company has two options:

1.  4-for-1 Stock split

2. 1-for-2 Reverse stock split

Required:

Calculate the par value per share for option 1

A.

Solution:

New trading price = 200/4 = 50

B.

Calculate the par value per share for option 2

Solution:

New number of shares = 6000/2 = 3000

New trading price = 200 * 2 = 400

C. Which option the company should select in order to meet its objective and why?

Solution:

I will select Option 1 because low price attract more Investors.

Your answer should be in such format:

Par value per share for option 1= 50

Par value per share for option 2= 400

Company should select= Option 1

Reason of selection= low Price Attract More investors.

FIN 623 GDB Solution

FIN 623 GDB Solution

Semester Spring 2011

Taxes are the main source of revenue for the government.

The government uses tax revenues to fund military Spending, retirement programs, health care and to Pay down the interest on the national debt.

The Government also uses taxes to influence the behaviors of Its citizens and corporations.

FIN 622 Assignment# 1 Solution

(FIN 622) CORPORATE FINANCE

Solution Idea of Assignment No. 1

Q # 1:

(a) Current Ratio:

Current Assets / Current Liabilities

       166,689   /   219,186 = 0.76

(b) Quick Ratio:

Quick Assets = Total Current Assets – Inventory

166,689   -    104,339 = 62,350

Quick Assets / Current Liabilities

    62,350   /     219,186 = 0.28

(c) Cash Ratio:

Cash + Cash Equivalents / Current Liabilities

18,288 + 0 / 219,186 = 0.0834

(d) Total Debt Ratio:

Total Assets = Total Equity + Total Debt

Total Assets – Total Equity / Total Assets

  748,879 – 339,693 / 748,879 = 0.5463

(e) Debt Equity Ratio:

Total Liabilities / Total Shareholder Equity

           409,186   /   339,693 = 1.20Q # 2:

Req (i):

= CCF x {[(1+i/m) nxm-1] / (i/m)}

= 850 x {[(1+0.08/4)6x4-1] / (0.08 / 4)}

= 850 x {[(1+0.02)24-1] / (0.02)}

= 850 x {[1.608-1] / (0.02)]

= 850 x {[0.608] / (0.02)}

= 850 x 30.4

= 25,840 Ans

Req (ii):

= CCF x {[(1+i/m) nxm-1] / (i/m)}

= 1700 x {[(1+0.09/2)6x2-1] / (0.09 / 2)}

= 1700 x {[(1+0.045)12-1] / (0.045)}

= 1700 x {[1.6958814] / (0.045)]

= 1700 x {[0.6958814] / (0.045)}

= 1700 x 15.4640312

= 26,288.853  Ans

Req (iii):

Second plan would be more feasible keeping the value of saving in

consideration.

FIN 623 Assignment#2 Solution

 FIN-623 Assignment#2 Solution

 
Solution:
Salary Income
Basic Salary 120,000
Rent free furnished accommodation 60,000
Conveyance Allowances 12,000
Leave Fare Assistance 17,000
Leave encashment 10,000
Employer 's contribution to provident fund Nil
Total Income 219,000
Less: Zakat (400+1000+600) (2000)
Taxable Income 217,000
Computation of Tax Liability
Tax On Rs: 217,000 . 0% 0
According to First Schedule Tax rate is 0%
Tax on Property Income Nil
Total Tax Liability 0
Less: Tax deducted at sources 3,000
Tax Refundable (3,000)

FIN 621 assignment#2 Solution

FIN 621 assignment#2 idea solution

Stock Holder Equity

Capital stock
Preferred stock(100 x 50000)	5000000
Common stock(1 x 700000)	700000
	5700000
Additional Capital
Common stock excess value	9800000
Total Paid Up	15500000
Add retained earnings	5450000
Total share holder equity	20950000