Financial Management Case Study

Author’s: Alexander Jack

Institution’s: Financeassignmentshelp.com

 

Answer-1

Capital = $ 10,000

Semiannually Rate = 12%

Years = 8

F = P * (1+r) ^Years

= 10,000 * (1+6%) ^24

Future Value = $ 40,489

Answer-E

Answer-2

The Answer is “B” 9.64%

Answer-3

The Answer is “A” $ 46,467.81527

Answer-4

“F” none of these answers

Answer-5

“C” $ 833.82

Answer-6

“G” 3$

Answer-7

“I” none of these answers

Answer-8

“C” 23,917.84331

Answer-9

“J” none of these answers

Answer-10

371$ Answer “G”

Answer-11

  1. $ 854.91

Answer-12

  1. $ 669.84

Answer-13

  1. 8.5%

Answer-14

  1. $ 5025.30

True and False – True (T) and False (F)

  1. T
  2. F
  3. F
  4. T
  5. F
  6. T
  7. T
  8. F
  9. F
  10. F
  11. F
  12. F
  13. F
  14. T
  15. F

 

Question-4 (CASE)

Anticipated Increase in NRB’s Self-Financing

Self-Financing is the amount which the directors and upper management of the company is likely to put into their provisions through which they can maximize their potential in the market. Self-Financing factor includes the provisions of Profit which is not distributed among the shareholders of the company. In the year 2016, the total amount of self-financing which hasn’t been shared with the shareholders was amounted to $ 36,953. This particular factor will help the company to achieve an increment of 10% in their sales. It is anticipated that the amount would be $ 400,000 with an interest rate of 8%.

Loan Schedule

SemestersOpening BalancePaymentsInterestsRepayment of capitalClosing balance
14,000,000.00320,000.00320,000.003,680,000.00
23,680,000.00320,000.00294,400.00294,400.003,385,600.00
33,385,600.00294,400.00270,848.00270,848.003,114,752.00
43,114,752.00270,848.00249,180.16249,180.162,865,571.84
52,865,571.84249,180.16229,245.75229,245.752,636,326.09
62,636,326.09229,245.75210,906.09210,906.092,425,420.01
72,425,420.01210,906.09194,033.60194,033.602,231,386.40
82,231,386.40194,033.60178,510.91178,510.912,052,875.49
92,052,875.49178,510.91164,230.04164,230.041,888,645.45
101,888,645.45164,230.04151,091.64151,091.641,737,553.82

 

  1. The net income of the company is also expecting to increase by 10%, like the sales, and on the basis of this increment, the amount of the dividend can be analyzed. The net income of the company in the year 2016 was $5,269, which is expecting to reach on the level of $ 5,796. Last year, the dividend payout ratio of the company was 60%. Hence, an amount of $3,477.54 will be distributed among the shareholders. Dividend per Share (DPS) would be $ 0.25.
  2. Value of Share can be determined by Dividend Discount Model

DDM = Dividend / Ke – g

= 0.25 / 10% – 8%

Share Price = 12.94$

  1. G. The company is in need of $ 3 Million, hence they required to release 300,000 Shares with a par value of $10 per share

H.The argument is as follows

  1. The incremental net income of the company is revealing clearly that the capacity of the company is high, and it will help the company to attain their target.

Secondly, the share price and dividend per share factor of the company is also expecting to increase continuously that put major effectiveness for the company in the long run.

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