1. What is cost of capital ? Explain how is the cost of long term debt, preference capital, equity capital and retained earnings are calculated? Discuss the relationship between EBIT and EPS.
2. a) Discuss the concept of project life cycle. Explain the different steps involved in the process of designing and using of Work Breakdown Structure. Explain in what ways may the Work Breakdown Structure be used as a key document to monitor and control a project ?
b) What is the need for economic appraisal of a project ? Explain process of the economic appraisal of a project.
3. What is meant by Social Cost Benefit Analysis? Explain how the Social Cost – Benefit Analysis of a project is undertaken ?
4. a) Explain the various financial instruments through which companies can raise funds from capital markets.
b) What is financial engineering and explain those factors which contribute towards financial engineering? Discuss the innovations that have taken place in fixed income securities.
5. Problem: Calculate the cost of capital in the following cases:
(i) X Ltd. issues 12% debentures of face value Rs. 100 each and realizes Rs. 95 per debentures. The debentures are redeemable after 10 years at a premium of 10%.
(ii) Y Ltd. issues preference shares of face value Rs. 100 each carrying 14% dividend and the realizes Rs. 92 per share. The shares are repayable after 12 years at par.
Note: Both companies are paying income – tax at 50%.
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