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Given the following data, calculate NDP at FC.
Particulars
(In Lakhs)
1. Wages
10,000
2. Rent
5,000
3. Interest
400
4. Dividend
3,000
5. Mixed income
400
6. Undistributed profit
200
7. Contribution to social security schemes (employer)
400
8. Corporation Profit tax
400
1. Explain the effect of contractionary monetary and fiscal policy on income and interest rate based on the following cases. And support your explanation using graphs.
a. There is fixed exchange rate regime and perfect capital mobility.
The demand and supply equations for a product are:Qd=300_6p and Qs-4+6p.
Determine the market equilibrium and draw graph.
Suppose that the government decides to impose a flat of Rs 1.70 per unit sold.Draw graph and explain.
Also calculate the total revenue earned by sellers before and after the text revenue raised by the government,changes in consumer and producers surplus and dead weight loss.
En. Iman is the owner of 100 bonds issued by LYC Bhd. These bonds have 8 years remaining to maturity, an annual coupon payment of RM80, and a par value of RM1,000. He purchased the bond 2 years ago when the interest rate was 8.5 percent. Due to the pandemic, the interest rate has fallen by 1.7 percent from it was 2 years ago. Considering this, En Iman decided not to hold the bonds till maturity but to sell it today.
Help him to compute his total capital gain from this investment
3.Consider the following information to answer questions
of 10% and to issue new preferred stock with a $4.00 pershare dvidend at $25 a share. The common
X Company is evaluating its cost of capita under alternative financing arrangements. In consultation
1 20% 30% 50%
2 50% 30% 20%
$2.50 per share next year. Market anaysts foresee a growth in dividends in Invest stock at a rate of
5% per year.nvest does not expect its cost of debt, preferred stock or common stock, to be different
Hint:coupon rate of the bond is the same as the beforetax cost of debt.
Percentage of New Capital
with nvestment bankers, X Company expects to be abe to issue new debt at par with a coupon rate
arrangement?
A.What s the weighted average cost of capital to X Company under the first financing arrangement?
stock of X Company is currenty seling for $20.00 a share. X Company expects to pay a dividend of
under the two possible financing arrangements. X Company margina tax rate is 40%.
4.Consider the following information:
Evauate the foowing three projects, using the profitability index. Assume a cost of capita of 15
Cash Flows Liquidate Recondition Replace
Project
A.Based on the given information, what would be the profitability index of each project respectivey?
Initial Cash Out fow –$100,000 –$500,000–$1,000,000
Year 3 cash inflow 75,000 250,000500,000
Year 2 cash inflow 60,000 200,000 500,000
Year 1 cash nfow 50,000 100,000 500,000
percent.
(Round your answer to the nearest four decimal points or use table value)
2.Based on the following information answer questions
Holyproducts corporations have the folowing capital structure, which it considers optimal:
Retained earnings 300,000
Bonds, 7% (at par) Br 300,000
Preferred stock, Br.5 240,000
Common stock 360,000
1,200,000
Additiona Informaton:
Dividends on common stock are currently Br 3 per share and are expected to grow at constant
A.Based on the above information, what woud be the cost of the bond?
rate of 6%.
Market price of common stock is Br 40 and the preferred stock is selling at Br50.
Flotation cost on new issues of common stock is 10%.
The interest on bonds is paid annualy and the company’s tax rate is 40%.
B.What would be the cost of common stock for Hoy Products Corporation?
Ramsis is a heavy equipment rental company. It is considerang the purchase of Tower crane at a price of BD 775,000. This crane is expected to operate for 15 years before returement with no salvage value at the end. The company as plan to rent the crane for BD 108.000 per year stang year and the rental increases by 10% thereafter. Cost of thas mantenice is expected to be BD 15,000 each year. a) Wisat is the discounted payback period if the MARR is 7% per year? b) In your enemeening analysis study, which method would you select (Payback or Present worth) to solve this problem? And why?
Based on absorption approach, discuss how an economy can improve its trade balance.
Expain two reasons why the demand for primary commodities might be price inelastic
