1. The capital structure of Hindustan Traders Ltd. As on 31.3.2000
is as follows:
Equity capital: 100 lakh equity shares of Rs.10 each: Rs.10
Crores
Reserves and Surplus: 2 Crores
14% debentures of Rs. 100 each: 3 Crores
For the year ended 31.3.2000 the company has paid equity dividend
at 20%. As the Company is a market leader with good future,
dividend is likely to grow by 5% every year. The equity shares
are now traded at Rs.80 per share on the stock exchange. Income
tax rate applicable to the Company is 50%.
(a) Compute the current weighted average cost of capital.
(b) The Company has plans to raise in future Rs.5 Crores by way of
floating long-term loan at 16% interest. When this takes place the
market value of the equity shares is expected to fall to Rs.50 per
share. What will be the new weighted average cost of capital of the
Company?
2. Explain the factors influencing pattern of capital structure.
3. What tools are available to the project manager to use in controlling a project? Identify some characteristics of a good control system.
4. Explain the various sources of long term financing.
5. Explain the various methods used for financial restructuring.