Assignment On Corporate finance
Submitted by : NAVANEETH MJ PGDM SEC B ROLL NO 111227
1. What is the objective of financial management? 2. Wealth maximization
The time preference for money is expressed in? Rate of return or discount rate.
3.
Which technique can be used to make heterogeneous cash flows comparable? Compounding technique or discounting technique.
4.
What does time value of money explain? It explains that a unit of money received today is worth more than a unit received in future.
5.
Interest is compounded when the amount earned on an initial deposit becomes part of the principal at the end of first compounding period.
6. What is the equation for compounding of interest? ?A = P(1+i) 7. As interest rate increases for any given year, the compound interest factor also increases. 8. For an interest rate of zero percent, ten compound interest factors always equal? One
9. Which instruction compounds interest after six months, quarterly or even monthly? Savings instructions.
10. Semiannual compounding means? It means that interest is usually paid after every six months at a rate of one-half of the annual interest.
11. In quality compounding, how many times is the interest paid?
It is paid in four equal installments.
12. The effect of compounding more than once a year can be expressed by the formula? 13. future value of a series of payments can be calculated using theformula? 14. compound sum of an annuity can be calculate by? Sn = CVIFA * A Where CVIFA is the appropriate factor for the sum of annuity.
15. In the present value approach future sums are converted into present sums . 16. The present value of future rupees will always be lower ,this procedure of fing=ding the present value of futue value is called? Discounting
[Link] is the mathematical ormula for the calculation of present value? [Link] is the formula for calculating the present value of a mixed stream of cash inflows? 19. The interest factor for the present value af an annuity is always less than the number of years the annuity runs. 20. The risk to the firm of being unable to cover fixed operating expenses are called ? Business risk
21. The risk of being unable to cover required financial obligations such as interst and preference dividends is called? Financial risk.
22. The greater the proportion of long term debt in the capital structure of a firm,the greater is the Financial risk. 23. In order to find the companys cost of capital,the Financial structure is assumes to remain fixed. [Link] are the components that the cost of capital consists of? The riskless cost of particular type of financing The business ris premium The financial risk premium
[Link] after tax cost of long-term funds through borrowings are known as? Cost of debt.
[Link] are the various kinds of specific costs? Cost of debt Cost of preference shares Cost of equity capital Cost of retained earnings
[Link] debt is computed as? [Link] are the various kinds of debt? Perpetual Redeemable
29. write the formula for redeemable debt when the principal is paid in lump sum? 30. write the formula for redeemable debt when repayments are done ina number of installments? 31. Which is the cheapest source of long term funds from companys point of view? Debt
[Link] dividend expected by the shareholders is known as? Cost of preference.
33. Prefernce dividend is a appropriation of shares 34. what are the 2 types of preference shares Irredeemable , redeemable
35 write the formula for the cost of preference share which has no specific maturity rate Kp= Dp/Po(1-f)
36 redeemable preference share is Kp= Pd+(RV-NP)/N/(RV+NP)/2
37 what is the approach to cal. The cost of equity capital based on didvdend valuation model Dividend approach
38 write down the formula for dividend price approach Ke = d1/d0
39 if growth is expected
Ke = Do(1+g)/Po(ex-dividend) + g
40 earnings /price approach Ke = earnings per share /net proceeds
41 formula of cost of retained earnings Kr = ke (1-t)(1-b)
42 cost of reserves and depreciation TC= cost of reserves +equity+retaines+earnings+debentures
43 what is the employment of asset or source of funds which the company has to pay fixed cost or fixed return is known as Leverage
44 what are the various kinds of leverage Financial leverage Operating leverage Combined leverage
45 the leverage associated with investments activities is referred to as operating leverage 46 the leverage associated with financing activities is called financial leverage 47 write down for degree of operating leverage %change in EBIT/%change in sales
48 write down the formula for degree of financial leverage %change in EBIT / %change in EBIT
49 what is the EPS at financial break even point Zero
50 what is the situation where in spite of the existing fixed cost the operating leverage is 1 If the business is not growing
