NMIMS – Corporate Finance
NMIMS MBA Corporate Finance Solved Assignment
1. M/s Anuradha Ltd. has a long-term fund requirement of Rs. 45 lacs for putting up a new manufacturing unit. This scenario is a common topic in NMIMS MBA Corporate Finance Solved Assignment.
The following options of funding are available.
a) It can raise a perpetual debt @ an interest rate of 9% p.a.
b) It can issue bonds of Rs. 100 each, at a A discount of 10%. Coupon rate of 6%. Bonds have a term of 5 years.
c) Issue Preference shares at a discount of 5%, redeemable at par after 6 years. Rate of Dividend is 8%
d) Invest retained earnings to the extent of 50% and take a loan from the bank for the balance at 8.5% interest rate for a period of 4 years. Equity holders expect a return of 15% from the business.
SVKM Narsee Monjee EMBA 2nd Sem Solved Assignments
2. Calculate the Cash Cycle for M/s ABC Traders Ltd. which is in the business of buying and selling garments. The following information is available for the firm.
| Opening Balances | Amt. Rs. |
| Inventory | 10,000 |
| Debtors | 40,000 |
| Creditors | 10,000 |
| Closing Balances | |
| Inventory | 30,000 |
| Debtors | 60,000 |
| Creditors | 20,000 |
| Costs Incurred during the year | |
| Total Purchases (50% on credit) | 12,00,000 |
| Selling Expenses | 80,000 |
| Administrative Expenses | 25,000 |
| Total Sales (80% on credit) | 15,00,000 |
Assume 360 days in a year.
The average cash cycle in the same industry is around 10 days. Comment on the cash cycle of M/S ABC Ltd. The Finance Manager is looking at the cash collection process critically and wants to reduce the Cash Cycle. What steps would you suggest her as her assistant? (10 marks)
3 a) Mr. Ramesh wants to plan to fund for his son’s education. He estimates that once his son is 21 years of age, he shall require to make a provision of about Rs. 5,00,000 for his college fees. His son is now 15 years of age. How much shall Mr. Ramesh invest today to make adequate provisions? He is also contemplating to make a fixed investment every year instead of a total investment today. How much should he invest each year to get the same amount of fees?
The current rate of interest is around an average of 8%. (5 marks)
b) Prepare cash budget of M/s Nirma Ltd. with the following information available.
| Jan. 23 | Feb. 23 | Mar. 23 | |
| Sales | 200,000 | 150,000 | 265,000 |
| Raw Materials Purchase | 160,000 | 135,000 | 190,000 |
| Manufacturing Expenses | 22,000 | 15,000 | 35,000 |
| Selling & Other Expenses | 10,000 | 9,000 | 10,000 |
Opening Cash balance was Rs. 15000 for Jan. 23. Opening Debtors were Rs. 52500. Sales are typically 75% in cash and 25% credit, which are received in next month. There was a scheduled loan repayment of Rs. 25000 in Feb. 23. All expenses are assumed to be paid for in cash. (5 marks)