State with reason whether the following transaction will result in an increase or decrease of working capital or do not affect working capital


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Corporate Finance



1. State with reason whether the following transaction will result in an increase or decrease of working capital or do not affect working capital (10 Marks)
A company issued debentures for Rs 50 lacs
Stock of Rs 50000 sold for Rs 75000
Brokerage paid Rs 125000
Long term Investment worth Rs 25000 sold for Rs 20000
Building purchased for Rs 25 Lacs



2. Calculate the value of share according to Gordon’s Model for Case P & Q and
Interpret the results when r>Ke, r= Ke (10 Marks)



3. A) The following detail is available for Leo Limited. It produces a special kind of
cement which is sold in the bags of 20 kgs .The revenue and cost patterns were as
follows-
Selling price per bag Rs 50
Variable cost per bag Rs 30
Fixed cost Rs1.5 lac
Quantity 15000 bags
Calculate the Break even quantity. Assuming a 10 % increase in the production volume,
calculate the percentage change in profit. (5 Marks)



3. B) Capital rationing is a strategy adopted by an organization so as to limit the cost of
its own investments. Apart from this, there are certain other benefits of the same. As a
financial manager of HDT Limited discuss the types and benefits of capital rationing.
(5 Marks)




Assignment Solutions, Case study Answer sheets
Project Report and Thesis - Contact
ARAVIND – 09901366442 – 09902787224


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