1. A company belongs to a risk class for which the appropriate capitalization rate is 10%. It currently has 25000 outstanding shares selling at Rs.100 each.The firm is contemplating the declaration of divivend of Rs.5 per share at the end of the current finanacial year.he company expects to have a net income Rs.2.5lacs and a proposal for making new investments of Rs.5lacs.
show that under MM assumptions, the payment of dividend does not affect the value of the firm.
2.Xltd has Rs.8lac equity shares outstanding at the beginning of the year 2008.The current market price per share is Rs.120. The board of directors of the company is contemplating Rs.6.40per share as dividend.The rate of capitalization, appropriate to the risk class to which the company belongs, is 9.6%
How many new shares are to be issued by the company ,if the company desires to fund an investment budget of Rs.3.20 crores by the end of the year assuming net income for the year will be Rs.1.60 crores ?
3.In a portfolio of the company,Rs.2lacs have been invested in asset X which has an expected return of 8.5%, Rs.2.8lacs in asset Y , which has an expected return of 10.2% and Rs.3.2lacs in asset Z which has an expected return 12%. what is the expected return for the portfolio ?
CAclubindia
