CaseSuppose you are a financial analyst of ABC Company which was 100% equity financed with net worth of Rs. 10 million and Weighted Average Cost of Capital of 22%. Management of the company has decided to change its capital structure by adding Rs. 4 million in debt at 14% cost of debt. Net income and cost of equity were Rs. 2,040,000 and 16.4% respectively after this restructuring. Moreover, Tax rate is 30%.Required:Keeping in view the Modigliani & Miller (M&M) theorem, you are required…See More
"Current Assets:A) Deferred Tax Asset (Dr. Balance)B) Capital Work in ProgressC) Cash and Balance with TreasuryD) Accrued Mark UpE) Marketable SecuritiesF) Lending to Other Financial InstitutionsG) Gold Reserves
Long Term Assets:
A) Operating Fixed…"
CURRENT ASSETS 1; CASH AND BALANCE WITH TREASURY BANK2; ACCRUED MARK UP3; DEFERRED TAX(DR.BALANCE4;LENDING TO OTHER FINANCIAL INSTITUTATION5; CAPITAL WORK IN PROGRESSMARKETABLE SECURTIESLONG TERM ASSETS1;INVESTMENT ON BOND2; OPRATING FIXED ASSETS3;ASSETS SUBJECT TO FINACE LEASE4;INVESTMENT IN ASSOCIATIONSee More
1 ACCURED MARKUP
2 DEFERRED TAX(DR.BALANCE)3: LENDING TO OTHER FINANCIAL INSTITUTIONS4:CASH BALANCE WITH TREASURY BANK5:CAPITAL WORK IN PROGRESS.
LONG TERM ASSETS
1:INVESTMENT IN BOND
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