PRELIM-I /SSF/03/10/2014

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   2 ½ Hours                                          Ganesha Classes                              Total Marks:75

 

N.B.:      1)      Q.2. to Q.4. having internal option.

         2)   All Questions are compulsory

         3)   Specify notes and assumption (if any)

 

 

 

Q.1. Answer the following (Any TWO) –                                                                                         (15)

A]      Calculate EVA

 

  1. Financial average
1.40 times
  1. Cost of equity
17.50%
  1. Income tax rate
30%
  1. Cost of debenture after tax
7%
  1. Capital structure:
  2. Equity capital
  3. Retained Earning
  4. 10% debenture
 

170 Lakhs

130 Lakhs

400 Lakhs

 

Note: financial Average = EBIT

EBT

 

B]        The management of company proposes to purchase a machine. Two machines are available Machine A and Machine B. From the following information, advise the management which of the two after native will be more profitable under the NET PRESENT VALUE:

Particulars Machine A Machine B
Initial outlay Rs. 32,000 Rs. 37,500
Net cash Flow p.a. Rs. 15,000 Rs. 10,000
Estimated Life 3 years 6 years

The cost of capital may be taken at 10% p.a.

Year 1 2 3 4 5 6
[email protected]% 0.909 0.826 0.751 0.683 0.621 0.564

 

C]        From the following details of Amar mills ltd for the year ended 31-3-2013, Calculate deferred tax assets / liability as per AS 22.

Particulars Rs.
Accounting profit 6,00,000
Book profit as per MAT 3,50,000
Profit as per Income tax Act 60,000
Tax Rate 20%
MAT Rate 7.50%

Also shown effect in P/L A/C

 

Q.2. Answer the following (Any TWO) –                                                                                         (15)

A]        Neel Ltd. Furnishes the following date regarding its six segment for the year ended 31st March 2013.

 

Segment Segment Assets Segment results Segment revenue
A 250 50 40
B 420 (150) 80
C 70 10 30
D 50 10 10
E 90 (20) 30
F 60 40 20

Identify the reporting segments and advice the management of Neel Ltd. Keeping in view the provision of AS-17 on segment reporting as issued by the ICAI.

 

B]        Race Ltd. Intends to invest in a project where in the capital investment would be to the extent of Rs. 50,000 lacs depreciate equally our five years. The tax rate applicable to the company is 40%. It is considering of availing a five term loan from UX Bank Ltd. To the extent of 70% of the project cost. The principal amount of this Loan would be repayable equally along with interest payable on reducing balance. The interest rate would be 9% p.a. The projected earnings before interest and tax for the next five years are: Rs.2,500 lac, Rs2,700 lac, Rs.3,000 lac, Rs.3,500 lac and Rs.3,650 lac. You are required to calculate the debt service coverage ratio and interest coverage ratio for the above project of the first three years only.

 

C]        Bring out Function of SEBI.

 

Q.3.   Answer the following (Any TWO) –                                                                                       (15)

A]     Raj Ltd acquired Machinery from Sonu Ltd. On 1/4/2008. The lease term covers the entire economics life of the machine i.e. 3 years. The fair value of the Machinery on 1/4/2008 is Rs.3,50,000 lease agreement requires the lease to pay an amount of Rs.1,50,000 per year beginning on 31/3/2009. The lease has guaranteed a residential value of Rs.11,400 on 31/3/2011. The implicit rate of interest is 15% p.a. Show Loan amortization schedule showing the breakup of interest & principal as per AS 19.

 

B]     Shyamsunder Ltd imported goods worth US @ 4,00,000 from M/s Hogg & Co U.S.A on 10th August, 2007 when the exchange rate was Rs.41.00. Shyamsunder Ltd agreed to pay the amounts in four equal instalment as under:-

Date              Exchange rate (Rs)

10-09-2007                     42.25

10-10-2007                     43.00

10-11-2007                     43.50

10-12-2007                     43.70

Prepare Foreign Exchange Fluctuation Account in the books of Shyamsunder Ltd

 

C]     Write a Short Notes on Book Building Process.

 

Q.4.  Answer the following – (Any TWO) –

A]     CRISIL     B]   Four categories of Merchant Banking     C] Qualities of the good Merchant Bankers

 

Q.5. Chirag Ltd. Furnishing you the following information:

Proposed set up at Alibag, Tax rate is @ 35%

Expected ROI @ 25%, Depreciation per annum  250 lakhs

Term loan required  4,000 lakhs, Interest rate @ 12%

Tenure of loan = 8 years repayable with installment and interest at the end of each year.

Tax holiday for first 5 years.

The cost of the proposed project and the means of finance are as follows:

 

Proposed Project
  • in lakhs
Cost of Project:

Plant & Machinery

Factory Building

Margin Money for working capital

Total

Means of Finance:

Additional Equity Share capital

Retained Earnings

Term Loan

      3,000      1,200

400

   4,400
 

           300            100

4,000

 

4,400

General manager of the term lending institution has requested you to:

  • Prepare flash report from the point of view of the term lending institution.
  • Evaluate the project for profitability in the next 3 years.
  • Calculate the debt service coverage ratio and interest coverage ratio.

All the best…..

 

                                                             ……. Ganesha Classes

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