1. Aries Ltd. Wishes to raise additional finance of Rs. 10 lakhs for muting its investment plans. It has Rs. 2, 10,000 in the form of retained earnings available for investment purpose. The following are the further detail
Debt/equity mix 30%/70%
Cost of debt
Up to Rs. 1, 80,000 10% (before tax)
Beyond Rs. 1, 80,000 16% (before tax)
Earning per share Rs. 4
Dividend pay out 50% of earning
Expected growth rate in dividends 10%
Current market price Rs. 44
Tax rate 50%
You are required:
a) to be determine the pattern for raising the additional finance
b) to determine the post tax average cost of additional debt
c) to determine the cost of retained earnings and equity
d) compute the overall weighted average after tax cost of additional finance
2. Discuss the use of EBTI-EPS analysis for designing capital structure of a company.
3. What is social cost benefit analysis? Make a social cost benefit analysis of any infrastructure project undertaken in your state.
4. Discuss the various non traditional modes of financing.
5. What is financial restructuring? What are the driving forces for mergers & acquisition?