MANAGING DEVELOPMENT INSTITUTE (MDI)

NMP-XIII

CORPORATE FUND FOR IMPROVING VALUE

(First Quiz)

(Open book)

Time Allowed: 10 minutes MILLIMETER: 6

Take note: Attempt all the questions. All questions hold equal represents. Correct answers should be marked by darkening the circles in the answer sheet provided.

1 . The primary aim of a publicly-owned firm enthusiastic about serving its stockholders should be to: a. Maximize expected total corporate income.

b. Take full advantage of expected EPS.

c. Minimize the chances of losses.

d. Increase the inventory price per share.

electronic. Maximize predicted net income.

2 . Imagine you plan to obtain a share of XYZ stock today and to keep it to get 2 years. Your expectations will be that you will not really receive a dividend at the end of Year you, but you will receive a dividend of Rs. 9. 25 at the end of Year installment payments on your In addition , you anticipate to sell the stock to get Rs. 150 at the end of Year 2 . If your predicted rate of return can be 16 percent, how much had you been willing to pay in this stock today? a. 164. 19

b. 75. up to 29

c. 107. 53

deb. 118. thirty-five

e. 131. 74

Step-wise Solution to Q. No . a couple of:

Stock value =

sama dengan = Rs. 118. thirty five.

3. Gomez Gadgets needs to organise financing for its expansion plan. Bank A offers to lend Gomez the required funds on a bank loan where interest must be paid out monthly, as well as the quoted rate is eight percent. Lender B will charge 9 percent, with interest due by the end of the season. What is the in the effective annual rates charged by two banking institutions? a. zero. 25%

w. 0. 50%

c. zero. 70%

d. 1 . 00%

e. 1 ) 25%

Step-wise Solution to Q. No . 3:

Effective twelve-monthly rate:

Financial institution A: 8%, monthly.

EARA =

sama dengan = eight. 30%.

Traditional bank B: 9%, interest credited at end of yr

EARB = 9%.

being unfaithful. 00% - 8. thirty percent = 0. 70%.

5. You get the following cash flows. Precisely what is the present benefit (t = 0) in case the discount price is 12 percent?

012%123456Periods

||||||

012, 0002, 0002, 0000-2, 1000

a. Rs. 3, 277

b. Rs. 4, 804

c. Rs. 5, 302

d. Rs. 4, 289

e. Rs. 2, 804

Solution to Q. No . some:

Discount price | zero. 12| В | В

Year| Cash Flows| PV factor| PV of Cash Flows

0| 0| 1| 0

1| 1| zero. 8929| zero. 8929

2| 2000| zero. 7972| 1594. 3878

3| 2000| 0. 7118| 1423. 5605

4| 2000| zero. 6355| 1271. 0362

5| 0| zero. 5674| zero. 0000

6| -2000| zero. 5066| -1013. 2622

| В | В | 3277

your five. Foster Companies has a task which has the following cash moves:

YearCash Flow

0-Rs. 300. 00

1 100. 00

two 125. 43

three or more 90. doze

some?

What cash flow will the job have to generate in the fourth year to ensure the task to have a 15% rate of return? a. Rs. 15. 55

b. Rs. 58. 95

c. Rs. 100. 25

deb. Rs. ciento tres. 10

elizabeth. Rs. one hundred and fifty. 75

Strategy to Q. Number 5:

Value of absent cash flow =

PV = -Rs. three hundred + (Rs. 100) (0. 8696) & (Rs. a hundred and twenty-five. 43) (0. 7561) & (Rs. 85. 12)(0. 6575) PV sama dengan -Rs. 58. 95.

At this point, solve for CF4:

Rs. 58. ninety five (1. 15)4 = Rs. 103. 15.

Financial calculator solution:

Enter the first some cash runs, enter We = 12-15, and resolve for NPV = Rs. 58. 945. The future value of Rs. 58. 945 will be the essential cash flow. PHOTO VOLTAIC = -58. 945; In = some; I/YR = 15; PMT = zero; solve for FV sama dengan Rs. 103. 10.

6. You deposited Rs. 1, 1000 in a family savings that compensates 8 percent interest, compounded quarterly, planning to use it in order to complete your a year ago in college. Eighteen a few months later, you decide to go to the Rugged Mountains to become a ski trainer rather than continue in school, therefore you close out your account. How much money can you receive? a. Rs. 1, 171

b. Rs. one particular, 126

c. Rs. one particular, 082...