amity solved assignment for international financial management

Assignment A

 

1. What are the factors affecting the capital structure of the company?

 The company raised preference share capital of $ 100000 by the issue of 10% preference share of $ 10 each. The floatation cost is 1%. Find out the cost of preference share capital issued at i) 10% premium ii) 10% discount

 

 

6. Why is the consideration of time important in financial decision making? How can time be adjusted?

 

 

7. What is the need of International Financial Management? List out the difference between domestic Finance & International Finance.

 

 

 

 

 

 

 

Assignment B

Case study

 

 

 

 

 

Fixed Cost other than depreciation are Rs. 20 million in year 1 and is expected to rise by 10% per year. Other Information: All profit after tax realized by the affiliate are transferable to the parent company at the end of each year. Depreciation funds are to be blocked until the end of year 5. These funds may be invested in local money market instruments, fetching a tax-free return of 15%. When the operating assets are turned over a local corporation, the balance of these funds including interest may be repatriated. The income tax rate in India is 48% but there are no withholding tax on transfer of dividends. Dividends received by Merck International in the United States would be subject to 50% tax. Merck International uses a 20% weighted average cost of capital for evaluating domestic projects similar to the ones planned in India. For Foreign projects in developing countries a 6% political premium is added.

Please give your answer in at least 25 words and press save and continue button.

 

1. Calculate the NPV and IRR for the project from the standpoint of the parent company

 

Answer:

 

 

2. What are your recommendations for the proposal?

 

 

Assignment C

 

Question No: 1

The Financial Leverage gives the relationship between

 

a)Sales revenue & EBIT of the firm

b)EBIT & EPS of the firm

c)Sales Revenue & EPS of the firm

d)`None of above

Question No: 2

The Combined Leverage gives the relationship between

 

a)Sales revenue & EBIT of the firm

b)EBIT & EPS of the firm

c)Sales Revenue & EPS of the firm

d)None of above

Question No: 3

The operating profit is same as:

 

a)Net profit

b)EBIT

c)Gross profit

d)None of the above

Question No: 4

The EBIT is :

 

a)Earnings before interest on taxes

b)Earnings before interest & taxes

c)Earnings before income & taxes

d)Earnings before income tax

Question No: 5

EPS is:

 

a)Earnings per share

b)Earnings profits

c)Earnings per sales

d)Earnings per year

Question No: 6

The weighted average cost of capital is calculated :

 

a)on market value but not book value

b)on both market value & book value

c)on book value but not market value

d)none of the above

Question No: 7

When we want to go to future value of an Annuity, we use;

 

a)present value factor tables

b)present value annuity factor tables

c)compounded value factor tables

d)compounded value annuity factor tables

Question No: 8

When we want to come to the present value from future value of an Annuity, we use;

 

a)present value factor tables

b)present value annuity factor tables

c)compounded value factor tables

d)compounded value annuity factor tables

Question No: 9

Capital Budgeting means;

 

a)Budgeting of the capital for investments in the long term Fixed assets

b)Financing of the capital for investments in the long term Fixed assets

c)Mitigating the losses

d)Preparing cash budgets

Question No: 10

In capital budgeting, when money is going out of the firm, it is called

 

a)Cash outflow

b)Cash inflow

c)Dividend

d)Interest received

Question No: 11

the mutually exclusive decisions are those,

 

a)acceptance of one proposal will automatically reject the the other proposal

b)acceptance of both the two proposals

c)rejection of all the proposals

d)does not include any proposal

Question No: 12

In capital budgeting, when money is coming in the firm, it is called

 

a)Cash outflow

b)Cash inflow

c)Dividend

d)Interest foregone

Question No: 13

Which of the following is not the reason for Time Preference of money?

 

a)Future uncertainties

b)Investment opportunities

c)Interest income

d)The value of money will remain the same every time

Question No: 14

Capital structure of a firm means:

 

a)The proportion of Debt & equity

b)Structure of financing ratio

c)Cash & capital proportion

d)Drawings by the owner

Question No: 15

Which of the following is not a factor effecting capital structure?

 

a)Flexibility

b)Control

c)Size

d)Profitability ratios

Question No: 16

The Operating Leverage gives the relationship between

 

a)Sales revenue & EBIT of the firm

b)EBIT & EPS of the firm

c)Sales Revenue & EPS of the firm

d)None of above

Question No: 17

The cost of Debt is always calculated

 

a)Before tax

b)After tax

c)After dividend

d)Before interest

Question No: 18

The cost of equity takes into account the

 

a)The market price of the share

b)The book value of the share

c)The last years dividend

d)all the above

Question No: 19

The cost of Retained Earnings is same as :

 

a)Cost of Equity

b)Cost of Debt

c)Cost of preference shares

d)All of the above

Question No: 20

The optimum capital structure is the one with

 

a)highest value of the firm

b)Lowest value of the firm

c)highest shares in numbers

d)highest debt

Question No: 21

International Finance is

 

a)Same as domestic finance

b)different from domestic finance

c)not so relevant

d)is used while shutting down of a firm

Question No: 22

Which of the following is not a function of finance Manager?

 

a)Financing the capital decisions

b)investing the capital in profitable projects

c)distributing the capital among different suppliers of products

d)Dividend decision

Question No: 23

__________ is concerned with the maximization of a firm's earnings after taxes.

 

a)Shareholder wealth maximization

b)Profit maximization

c)Stakeholder maximization

d)EPS maximization

Question No: 24

Which of the following statements is correct regarding profit maximization as the primary goal of the firm?

 

a)Profit maximization considers the firm's risk level.

b)Profit maximization will not lead to increasing short-term profits at the expense of lowering expected future profits.

c)Profit maximization does consider the impact on individual shareholder's EPS.

d)Profit maximization is concerned more with maximizing net income than the stock price.

Question No: 25

You need to understand financial management even if you have no intention of becoming a financial manager. One reason is that the successful manager of the not-too-distant future will need to be much more of a __________ who has the knowledge and ability to move not just vertically within an organization but horizontally as well. Developing __________ will be the rule, not the exception.

 

a)Specialist; specialties

b)Generalist; general business skills

c)Technician; quantitative

d)Team player; cross-functional capabilities

Question No: 26

What one is not the decision of financial management?

 

a)Asset management decision

b)Financing decision

c)Investment decision

d)Dividend decision

Question No: 27

Which of the following statements is not correct regarding earnings per share (EPS) maximization as the primary goal of the firm?

 

a)EPS maximization ignores the firm's risk level.

b)EPS maximization does not specify the timing or duration of expected EPS.

c)EPS maximization naturally requires all earnings to be retained.

d)EPS maximization is concerned with maximizing net income

Question No: 28

Money has time value because

 

a)Money in hand today is more certain than money to be got tomorrow.

b)The value of money -gets discounted as time goes by.

c)The value of money gets compounded as time goes by.

d)None of the above

Question No: 29

In order to find the value in 1995 of a sum of $ 100 invested in 1993 at X% interest

 

a)The FVIFA table should be used.

b)The PVIFA table should be used.

c)The FVIF table should be used.

d)None of the above 

Question No: 30

The relationship between effective rate of interest (r) and nominal rate of interest (i) is best represented by

 

a)i = (1 + 1)−mmr

b)r = (1 + 1)−nnr

c)r = (1 + 1)−mmr

d)None of the above

Question No: 31

If you invest $ 10,000 today for a period of 5 years, what will be the maturity value if the interest rate is?

 

a)8%

b)10%

c)12%

d)15%

Question No: 32

You are considering investing $ 1,500 at an interest rate of 5% compounded annually for 2 years or investing the $1,500 at 7% per year simple interest rate for 2 years. Which option is better?

 

a)Simple Interest by $56.25

b)Compound Interest by $114.05

c)Compound Interest by $52.75

d)Simple Interest by $75.19

Question No: 33

What will be the amount accumulated by $ 9,000 in 9 years if it is compounded at a rate of 9% per year?

 

a)F = $ 18,229.30

b)F = $ 19,547.04

c)F = $ 20,978.22

d)F = $ 19,055

Question No: 34

If Rs300 is invested now, Rs500 two years from now, and Rs700 four years from now at an interest rate of 3% compounded annually, what will be the total amount in 10 years?

 

a)F = Rs 1,872.40

b)F = Rs 1,540.27

c)F = Rs 1,975.11

d)F = Rs 1,801.36

Question No: 35

An individual deposits an annual bonus into a savings account that pays 5% interest compounded annually. The size of the bonus increases by Rs200 each year and the initial bonus amount at t=1 was Rs250. Determine how much will be in the account immediately after the fifth deposit.

 

a)F = Rs3019.59

b)F = Rs3483.89

c)F = Rs2953.94

d)F = Rs2752.95

Question No: 36

What is the equal-payment series for 10 years that is equivalent to a payment series of Rs 15,000 at the end of the first year (t=1) decreasing by Rs300 each year over 10 years? Interest is 9% compounded annually.

 

a)A = Rs 7120.85

b)A = Rs 10,118.72

c)A = Rs 12,929.01

d)A = Rs 13,860.66

Question No: 37

the time value of money in the present year will be

 

a)less than the value of future year

b)more than the value of the future year

c)will be the same in future year

d)will be in negative

Question No: 38

Which is the best measure of capital budgeting?

 

a)Payback period

b)Annual rate of return

c)Profitability index

d)NPV

Question No: 39

When we want to go to future value of a lump sum amount, we use;

 

a)present value factor tables

b)present value annuity factor tables

c)compounded value factor tables

d)compounded value annuity factor tables

Question No: 40

When we want to come to the present value from future value of a lump sum amount, we use;

 

a)present value factor tables

b)present value annuity factor tables

c)compounded value factor tables

d)compounded value annuity factor tables

 

 

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Year:  2015