3. (a) Walter’s Approach:

A company has a book value per share of Rs. 150. Its return on equity is 15% and it follows a policy of retaining 60% of its earnings. If the opportunity cost of capital is 18%, what is the price of the share today. According to Walter’s approach.


(c) Foreign Exchange:
The price of the pound sterling was quoted at $1.80 in New York and on the same date the DM spot rate was quoted at $.40.
• What would you expect the price of the pound to be in Germany?
• If the pound qas quoted in Frankfurt at DM 4.40/pound, what would you do to profit from the situation?

please send your answers to psrinivas1@in.com

2. Samreen Ltd is considering an investment in one of the two mutually exclusive proposals – Projects p1 and p2 , which require cash outlays of Rs.3,40,000 and Rs. 3,30,000 respectively. The certainty equivalent (C.E.) approach is used in incorporating risk in capital budgeting decisions. The current yield on government bond is 8% and this be used as the risk less rate. The expected net cash flows and their certainty equivalents are as follows:





Project P1 Project P2
Year-end Cash Flow C.E. Cash Flow C.E.
1 180000 .6 180000 .8
2 200000 .8 180000 .7
3 200000 .7 200000 .8

Present Value factor os Rs. 1.00 discounted at 8% at ehe end of the year 1,2,3 are .926, .857 and .794 respectively. You are required to find out:-
I. Which project should be accepted?
II. If risk adjusted discount rate method is used, which project would be analysed with a higher rate?


please send your answers to psrinivas1@in.com

1. A company is considering the replacement of its existing machine which is obsolete and unable to meet the rising demand for its product. The company is faced with two alternatives: to buy Machine A which is similar to the existing machine or to go in for Machine B which is more expensive and has much greater capacity. The cash flows at the present level of operations under the two alternatives are as follows:-


Machine Immediate Cash outflows Cash inflows (in lakhs of Rs.) at the end of
(in lakhs of Rs.) 1st IInd IIIrd Ivth Vth
year year year year year
Machine A 25 - 5 20 14 14
Machine B 40 10 14 16 17 15

The company’s cost of capital is 10%

The finance manager tries to appraise the machines by calculating the following :
1. Net Present Value
2. Profitability Index
3. Payback period; and
4. Discounted payback period

At the end of his calculations, however, the finance manager is unable to make up his mind as to which machine to recommend.

You are required to make these calculations and in the light thereof to advise the finance manager about the proposed investment.

Note: Present values of Re.1 at 10% discount rate are as follows:

Year 0 1 2 3 4 5
P.V. 1.00 .91 .83 .75 .68 .62

I have a query on computation of CRAR for an NBFC-ND-SI !!!While taking risk adjusted figures of on balance sheet items ,the assets should simply be multiplied with their risk percentages right!!
For eg : If furniture is 250000 ,risk percentage is 20%!! It works out to 250000*20/100 =50000.Isnt this the method

Please provide the interest rate chargebale on NPA account by a bank. Is there any maximum rate, over which bank can not charge ?
Next, what is the periodicity- monthly, quarterly or annual?
Further simple interest or compunding ?
Thanks for the prompt reply.
I would like to know if the old dues are now likely to be recovered or account is settled, what is the applicable rate of interest (maximum, if any)?

In case of an Educational Institute, registered for service tax purposes, executes different educational programmes from the financial support (90%) of a Ministry of Government of India and students (10%).

Funds are received by the Ministry under grants-in-aid, and individual projects are approved based on the detailed proposal with budget submitted by the Educational Institute.

After the Registration, first proposal has now been submitted and Ministry on examinatioin has stated that service tax cannot be paid as financial support is given by the Ministry from Grants in aid and it is not a commercial transaction.
Educational Institute has stated that since it is payable by receipient of service and that it is collected for payment to Concerned Service tax authority of the GOvernment of India.

Query 1- Whether service tax is recoverable under these circumstances, if yes,
(a) whether justification of Educational Institute is sufficient.
(b)If not, what more arguments can be given so that the Ministry agrees to pay serivce tax

Query 2- If service tax is not recoverable under these circumstances, Why it should not be recovered under which section of Service tax Rules.

Dear Experts,

What is the criteria of audit of co-op hsg.soc.

If audit is applicable then which form we have to submitted in income tax dept.& for preparation of computation of income from where i will get all the information.

I need all the information regarding co-op hsg.soc. from starting to end.

Reply ASAP if possible

Regards,
Prakash Jasani

Dear Experts,

One of our client make it some furniture work in their offices.

They are deduct the tds on payment of labour chrges on account of furniture work but esic(6.5%) is not deducted.

As per my opnion esic has to be deducted but our client CFO is not agreee to deduct the esic, she is demanding the cicular from me but i don't have.

So plz.hepl me & anybody have this kind of cicular then plz.forward it to my emil id.

My email id: prakashjasani_56@rediffmail.com

Reply ASAP if possible.


Regards,
Prakash Jasani

RESPECTED SIR,

THANKS FOR PREVIOUS ANSWER BUT WHICH IS MORE BENEFICIAL IN TERMS OF CARRIER/MONEY IN PRESENT : CS OR ICWA

REGARDS

RAJIV SHARMA

Dear Sir,

We are doing mechanical works contract which taken from Government and also private.
For exp. Irrigation dame gates (like Nagarjunasagar gates), water shed gates, Canal gates and power house gates and related installation, erection and commissioning.

1. is it covered service Tax? If yes, what is the service tax liability
2. if we taken composition what about Input services

A) in the above contract taken with material
How to calculate tax liability? Can I opt composition? What about Input services?

B) if taken without material (i.e. only installation, Erection and commission)
How to calculate tax liability? Can I opt composition? What about Input services?

Thank you sir

balu