Advanced Financial Management - May 2022

M/s. Daksh Ltd is planning to import multipurpose machine from USA at a cost of $15000. The company can avail loans at 19% Interest per annum with quarterly rests with which it can import the machine. However, there is an offer from New York branch of an Indian based bank extending credit of 180 days at 2% per annum against opening of an irrevocable letter of credit. Other Information: Spot rate US$ 1 = ₹75 180 days forward rate US…

(a) Mr. D had invested in three mutual funds (MF) as per the following details: Particulars MF ‘A’ MF ‘B’ MF ‘C’ Amount of Investment 2,00,000 5,00,000 4,00,000 NAV at the time of purchase 10.00 25.00 20.00 Dividend Yield up to 31.03.2022 3% 5% 4% NAV as on 31.03.2022 10.50 22.80 20.80 Annualized Yield as on 31.03.2022 9.733% - 11.185% 15% Assume 1 Year = 365 Days. Mr. D has misplaced the documents of his investments. You are required to…

Skylark Systems Ltd. is interested to expand its operations in US for which it requires funds of $ 20 million, net of issue expenses and floatation costs etc., which amounts to 3% of the issue size. To finance this project it proposes to issue GDR. Following factors are considered in pricing the issue: (i) Expected market price of share at the time of issue of GDR is ₹300 (FV ₹10) (ii) 3 shares shall underlay each GDR and shall be…

(a) Following information is available pertaining to ABC Ltd. which is expected to grow at a higher rate for 3 years after which growth rate will stabilize at a lower level. Base year information is - Revenues EBIT Capital Depreciation (After Depreciation) Expenditure % 1,000 Cr. ₹150 Cr. * 140 Cr. * 100 Cr. Information for high growth and stable growth period are as follows: Stable Growth Particulars High Growth Stable Growth Growth in Revenue & EBIT 20% 10% Growth…

M/s. Vasavi Ltd. is considering the takeover of M/s. SKPD Ltd. by the exchange of five new shares in M/s. Vasavi Ltd. for every eight shares in M/s. SKPD Ltd. The relevant financial details of the two companies prior to merger announcement are as follows: Particulars M/s. Vasavi Ltd. M/s. SKPD Ltd. Profit before tax (# crore) 18 20.8 No. of shares (in crore) 20 18 PIE ratio 1 8 Corporate tax rate 30%. You are required to determine: a.…

Correlation Coefficient of the two securities, from the historical rates of return over the past 10 years. Years 1 2 3 4 5 6 7 8 9 10 Security 1 15 10 | 12 | 8 18 | 16 | 20 | 24 | 16 | 14 (Return %) Security 2 24 20 | 18 | 14 | 22 | 26 | 12 | 28 | 16 | 15 (Return %) (8 Marks) (b) MPD Ltd. issues a 750 Million…