Provide MGT201 GDB solution

On Wed, Oct 26, 2011 at 4:09 AM, mc080400168 Muhammad Javed <mc080400168@vu.edu.pk> wrote:

MGT201 1^ST G.D.B IDEA SOLUTION

PREPARED BY AHSAN RANA (BROWN EYES)

DON'T COPY & PASTE JUST GET IDEA OK??

 

 

 

This Balance Sheet also shows that ABC Company took loan from financial institution to purchase plant & machinery for Rs. 253,463.

Keeping the given information into consideration, you are required to answer the following:

1. What would be Debt Ratio before taking loan?
2. What would be Debt Ratio after taking loan?
3. Please comment that how the change in Debt Ratio would affect the decision of the financial institution if the company requests for further loan?

Solution:

This is an Idea solution by Asad Munir pls do not copy paste as it is. Intellectual and positive comments will be appreciated

Question No. 1

Cost of equity = [9 / (80-5)] + .05 = 0.17
Cost of preferred stock = 9/90 = .10

WACC = rD XD. (1-Tax) + rP XP + rE XE .
WACC = .30 x .13 (1-.35) + .30 x .10 + .40 x 0.17
WACC = 0.02535 + .03 + 0.068
WACC = 0.12335
WACC = 12.335

Question No. 2

Break even point in units = Fixed expenses / Unit contribution margin

Break even point in units Firm A = 24600 / (16-6.75) = 2660
Break even point in units Firm B =30600 / (20-9.75) = 2985

On Mon, Oct 24, 2011 at 10:30 PM, mc100202487 Asim Nazir <mc100202487@vu.edu.pk> wrote:

Dear All,

 

Please help me. I want MGT 201 GDB Solution.

 

 

ABC Company is a sugar manufacturing and its position as on 31^st December, 2010 is as follows:

 

ABC Company

Balance Sheet

Assets	Rs.	Liabilities and Owner's Equity	Rs.
Current Assets	15,468	Current Liabilities	8,521
Land & Building	179,589	Long term Debts	96,895
Plant & Machinery	253,463	Loan for plant & machinery	253,463
		Equity	89,641
Total Assets	448,520	Total Liabilities	448,520

As on 31^st December, 2010

 

Assets	Rs.	Liabilities and Owner's Equity	Rs.
Current Assets	15,468	Current Liabilities	8,521
Land & Building	179,589	Long term Debts	96,895
Plant & Machinery	253,463	Loan for plant & machinery	253,463
		Equity	89,641
Total Assets	448,520	Total Liabilities	448,520

 

This Balance Sheet also shows that ABC Company took loan from financial institution to purchase plant & machinery for Rs. 253,463.

 

Keeping the given information into consideration, you are required to answer the following:

 

1.      What would be Debt Ratio before taking loan?

2.      What would be Debt Ratio after taking loan?

3.      Please comment that how the change in Debt Ratio would affect the decision of the financial institution if the company requests for further loan?

 

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For online discussion forums and inclusive portal about exam related data,Fun ,poetry,fashion,etc please visit www.virtualians.net
 
www.virtualians.net
study with moj masti

Virtulians Group Basic Posting Rules

Unethical comments, abuses are strictly prohibited you are expected to be polite while posting the messages
Messages containing Phone Numbers are treated as spam
Posting links of other sites or groups is not allowed