MANAGEMENT PROGRAMME Term-End Examination June, 2010 MS-42 : CAPITAL INVESTMENT AND FINANCIAL DECISION Time : 3 hours Maximum Marks : 100 (Weightage 70%) Note : Attempt any five All questions carry equal Present value tables would be provided, if asked for. Use of calculators is allowed. A Limited Company has the following Capital Structure : Equity Share Capital Rs. 40,00,000 (2,00,000 Shares) 6% Preference Shares 10,00,000 8% Debentures 30,00,000 80,00,000 The market price of the company's equity share is Rs. 20. It is expected that company will pay a current dividend of Rs. 2 per share which will grow at 7% for ever. The tax rate may be presumed at 50%. You are required to compute the following: A weighted average cost of capital based on existing ...
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