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Financial Management
Cost Accounting and Financial Management for CA Professional Competence Examination
752 SOLVED PROBLEMS
Question: 2.S2.13
Mr X wishes to determine the rate of growth of the following stream of dividends he has received from a company: ...
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Growth has been experienced for four years. In ord...
Question: 5.S2.EQ.6
The cash flows of two mutually exclusive projects are as under: ...
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(i) Determination of NPV of projects P and J (ii) ...
Question: 5.S2.RQ.17
ABC Ltd is planning to purchase a machine to meet the increased demand for its product in the market. The machine costs Rs 50,000 and has no salvage value. The expected life of the machine is 5 years, and the company employs the straight line method of depreciation. The estimated earnings after ...
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Earnings after taxes (EAT) Rs 5,000 Add deprecia...
Question: 5.S2.P.1
A company is considering an investment proposal to instal new milling controls at a cost of Rs.50,000. The facility has a life expectancy of 5 years and no salvage value. The tax rate is 35 per cent. Assume the firm uses straight line depreciation and the same is allowed for tax purposes. The ...
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(i) Pay back (PB) period: The recovery of the inve...
Question: 5.S2.P.2
A project costing Rs 5,60,000 is expected to produce annual net cash benefits (CFAT) of Rs 80,000 over a period of 15 years. Estimate the internal rate of return (IRR). Also, find the pay back period and obtain the IRR from it. How do you compare this IRR with the one directly estimated? ...
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\text { PB value }=\frac{\text { Rs } 5,60,...
Question: 2.S2.14
Suppose a particular debenture pays interest at 8 per cent per annum. The debenture is to be paid after 10 years at a premium of 5 per cent. The face value of the debenture is Rs 1,000. Interest is paid after every six months. What is the current worth of the debenture, assuming the appropriate ...
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Since the interest is compounded semi-annually ove...
Question: 2.S2.12
A limited company borrows from a commercial bank Rs 10,00,000 at 12 per cent rate of interest to be paid in equal annual end-of-year instalments. What would the size of the instalment be? Assume the repayment period is 5 years. ...
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The problem relates to loan amortisation. The loan...
Question: 2.S2.11
Company XYZ is establishing a sinking fund to retire Rs 5,00,000, 8 per cent debentures, 10 years from today. The company plans to put a fixed amount into the fund each year for 10 years. The first payment will be made at the end of the current year. The company anticipates that the funds will earn ...
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The solution to this problem is closely related to...
Question: 2.S2.9
If ABC company expects cash inflows from its investment proposal it has undertaken in time period zero, Rs 2,00,000 and Rs 1,50,000 for the first two years respectively and then expects annuity payment of Rs 1,00,000 for the next eight years, what would be the present value of cash inflows, ...
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We can solve the problem by applying the long meth...
Question: 2.S2.8
The ABC company expects to receive Rs 1,00,000 for a period of 10 years from a new project it has just undertaken. Assuming a 10 per cent rate of interest, how much would be the present value of this annuity? ...
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The appropriate ADF (annuity discount factor) of a...
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