Advanced Financial Management - Sep 2025 RTP

ABC Ltd. plans to invest ` 16,00,000 in a new unit. The project is expected to have a useful life of 4 years, with no salvage value at the end of its life. The annual depreciation charge for the project is ` 400,000. Projected revenues and costs for the project, ignoring inflation, are provided as follows: Revenues (`) Costs (`) 2 14,00,000 8,00,000 1 3 4 12,00,000 16,00,000 16,00,000 6,00,000 8,00,000 8,00,000 ABC Ltd. is subject to a corporate tax…

In a recent Board Meeting of N Ltd. following financials of N Ltd. for the year ending 31st March 2025 were presented: Balance Sheet as on 31.03.2025 Liabilities ` ’000 Assets Equity Capital 4,80,000 Fixed Assets 10% Bonds 92,000 Cash Sundry Creditors 66,000 Sundry Debtors Bills Payable Other Current Liabilities Total Liabilities 88,000 Closing Stock 44,000 7,70,000 Total Assets 2,42,000 88,000 1,10,000 3,3,0000 7,70,000 Income Statement for the Year ending 31.03.2025 Particular (` '000) Sales Less: Cost of Goods Sold…

XYZ company has current earnings of ` 3 per share with 5,00,000 shares outstanding. The company plans to issue 40,000, 7% convertible preference shares of ` 50 each at par. The preference shares are convertible into 2 shares for each preference shares held. The equity share has a current market price of ` 21 per share. (i) What is preference share’s conversion value? (ii) What is conversion premium? (iii) Assuming that total earnings remain the same, calculate the effect of…

The following data are available for three bonds A, B and C. These bonds are used by a bond portfolio manager to fund an outflow scheduled in 6 year Current yield is 9%. All bonds have face value of `100 each and will be redeemed at par. Interest is payable annually. 5 SEPTEMBER 2025 EXAMINATION REVISION TEST PAPER Maturity (Years) Coupon rate B 8 11% A 10 C 10% 5 9% (i) Calculate the duration of each bond. (ii) The…

410 Crores, its debt, is worth ` 170 Crores. Printer Division segments value is attributable to 74%, which has an Asset Beta (βp) of 1.45, balance value is applied on Spares and Consumables Division, which has an Asset Beta (βsc) of 1.20 KGFL Debt beta (βD) is 0.24. 6 SEPTEMBER 2025 EXAMINATION REVISION TEST PAPER ADVANCED FINANCIAL MANAGEMENT You are required to calculate: (i) Equity Beta (βE) of KGFL. (ii) Ascertain Equity Beta (βE) of KGF Ltd., if it decides…

A Rice Trader has planned to sell 22000 kg of Rice after 3 months from now. The spot price of the Rice is ` 60 per kg and 3 months Futures on the same is trading at ` 59 per kg. Size of the contract is 1000 kg. Required: (ii) (a) What the trader can do to mitigate its risk of reduced profit if the price is expected to fall as low as ` 56 per kg, 3 months hence.…

Electra space is consumer electronics wholesaler. The business of the firm is highly seasonal in nature. In 6 months of a year, firm has a huge cash deposits and especially near Christmas time and other 6 months firm cash crunch, leading to borrowing of money to cover up its exposures for running the business. It is expected that firm shall borrow a sum of €50 million for the entire period of slack season in about 3 months. A Bank has…

Mr. A, a HNI invested on 1.4.2014 in certain equity shares as below: Name of Co. X Ltd. Y Ltd. 8 No. of shares 1,00,000 (₹ 100 each) 50,000 (₹ 10 each) Cost (₹) 2,00,00,000 1,50,00,000 SEPTEMBER 2025 EXAMINATION REVISION TEST PAPER ADVANCED FINANCIAL MANAGEMENT In September 2014, 10% dividend was paid out by X Ltd. and in October 2014, 30% dividend paid out by Y Ltd. On 31.3.2015 market quotations showed a value of ₹ 220 and ₹ 290…