Attempt all the problems

problem1)

(a) Define Capital Budgeting? Describe in brief the different techniques of appraisal of the investment project.

(b) Consider the project with following cash flows. find out the net present value of the project of the project. The rate of discount is 20%? Rs. in Lakhs

Year                    0         1     2    3    4      5
Cash flows         (-)150   50   60  55  60    75

problem2)

(a) Describe the meaning and significance of cost of capital.

(b) describe the concept of ‘Risk’ and ‘Return’.

problem3)

(a) List the methods of estimating working capital requirement?

(b) describe the purpose for holding cash.

problem4)

(a) Company buys 1, 00,000 units of material called ‘M’ every month. Order costs are Rs. 200 per order and carrying costs are 10 paisa per unit per month. Determine EOQ.

(b) Firm has a sale of 2000 units. It expects to increase its sale to 2800 units. Fixed cost is Rs. 4,00,000. Compute degree of operating leverage of the firm if selling price is Rs. 400 per unit and variable cost is Rs. 75 unit.

problem5)

(a) What do you mean by capital structure? What are the factors which affect choice of debt in the capital structure?

(b) Describe share buyback? Why do companies choose share buyback?