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Sandeep (GM) (50 Points)

27 October 2013

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Issuance of Bonus Share results in to higher market capitalization.
Dividend yield and earning yield are two sides of the same coin.
A Consultant advises the management to select mutually exclusive projects with high and low investments on the basis of NPV method.
A consultant advises you to go for flexible budgeting when the production is even throughout the year.

Question: Capital Budgeting Decisions, though difficult, yet are important for growth of the Companies.” Elucidate.

Question: “Financing a Business through borrowing is cheaper than equity.” Discuss.

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Back in the Game (a) (1273 Points)
Replied 27 October 2013

False.There s no Flow of Capital to increase the market capitalization.

True.As long as Rate of Return of the company and Rate of Return Share holder are the same.

False .It should be on IRR.

False.If production is Even (same) there is no need of Flexible Budgets.

True.Projection is Difficult task or Probabilistic task,However it is a useful tool to Asses the Feasibility of the Project.

False.The Risk involved in Debt Borrowing is often high and more.Debt is a Concept devoid of Sense,because of it is inherent Feature of paying money on money or precisely interest on interest...Where in there is Always high Risk effective interest being more if corporate do not Repay the debts on Scheduled time,Unlike Equity which is share of profit to share holder if profit is made.

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