Solution to ipcc fm november 2014 paper

@ Shardendu, in net income approach, overall cost of capital reduces as the debt content isncreases, but u see in my solution overall cost of capital has remained the same. It is 1st preposition of MM approach. secondly in NI approach Ke and Kd remain the same. but in my solution, as debt content increases,  Ke increases in such a propotion so as to offset the effect of use of debt, the cheaper source of funds.it is second preposition of MM approach. K0 remains the same whether it is a levered co. or unlevered co.

further, in MM approch there will be no taxes (basic assumption). that is why tax has been ignored.

its not wrong. it is incomplete

@ Naushad Ahmed.. It will be decided by ICAI. I am not the right person to comment on that.

@ archit goel ...No u need to attend the question and give reason for ur solution. then only u will get marks.

Thanks Mam, for solution.

thanku so  much mam for your solution of financial management paper.

but 1 query i want to ask u that in ques no-3(b) about long term debts.they said in ques that long term debt are nil but we are assuming (B/F)

@ Ram Karan Verma, ur query has already been answered above