Financial Mgmt - Mr. Nimish Holds the Following Portfolio Share Beta Investment

Need Answer Sheet of this Question paper, contact

aravind.banakar@gmail.com

www.mbacasestudyanswers.com

ARAVIND – 09901366442 – 09902787224

FINANCIAL MGMT

(A). (1).Mr. Nimish holds the following portfolio. (10 marks)

Share Beta Investment

Alpha 0.9 Rs.12, 00,000

Beta 1.5 Rs. 3, 50,000

Carrot 1.0 Rs. 1, 00,000

What is the expected rate of return on his portfolio, if the risk rate is 7 per cent and the

expected return on the market portfolio is 16 per cent?

(A). (2). A share is selling for Rs.60 on which a dividend of Rs.4 per share is expected at the end

of the year. The expected market price after dividend declaration is to be Rs.70. Compute the

following: - (10 marks)

(i) The return on investment ® in shares.

(ii) Dividend yield

(iii) Capital Gain Yield

(B) DIC Ltd. provides the following data: (20 marks)

Comparative trial balance

March 31 year 2 March 31 year 1 Increase(Decrease)

Debit Balance 20 10 10

Cash Rs.190 Rs. 90 Rs.100

Working capital (other than cash) 100 200 (100)

Investment (Long term) 500 400 100

Building and equipment 40 50 (10)

Total 850 750 100

Credit

Accumulated Depreciation 200 160 40

Bonds 150 100 50

Reserves 350 350 ---

Equity Shares 150 140 10

3

Total 850 750 100

Income Statement

For the period ending March 31, year 2

(Amount in Rs lakh)

Sales Rs.1000

Cost of Goods Sold 500

Selling Expense Rs.50

Administrative Expenses 50 100

Operating Income 400

Other charges

Gain on sale of building and equipment Rs 5

Loss on sale of investments (10)

Interest (6)

Taxes (189) (200)

Net Income after taxes 200

Notes: (a) The depreciation charged for the year was Rs.60 Lakh

(b) The Book value of the building and equipment disposed was Rs 10 Lakh

(c)

Prepare a Cash Flow Statement (Based on AS-3)

(C). (1). A. Ltd. produces a product which has a monthly demand of 4,000 units. The product

requires a component...