Strategic Financial Management | NMIMS Assignment Help June 2023 Questions

Q1. Sun Ltd plans to invest INR 500,000 in a project with the following cash flows:

Cash flow after tax year 1 = INR 100,000

Cash flow after tax year 2 = INR 300,000

Cash flow after tax year 3 = INR 200,000

Cash flow after tax year 4 = INR 200,000

The discount rate is 5 per cent and the risk adjusted discount rate is 20 per cent. Determine the NPV of the project using the risk adjusted discount rate. Will your decision be the same if the risk adjusted discount rate is increased to 22 per cent?

Q2. Mergers and Acquisitions are a part of corporate restructuring exercises. Discuss the different forms and types of mergers and acquisitions.               

Q3.a. An investor purchases a August call option on Tata Motor’s stock, with an exercise price of Rs. 440. Determine the intrinsic value today if Tata Motor’s stock is trading at

  1. i) 420
  2. ii) 460  

Q3.b. Apple Ltd has deployed a capital of 400 million in Orange Ltd a 100 per cent owned subsidiary company and it incurs a cost of 10 per cent. The after-tax profit generated by the subsidiary company is INR 45 million. Compute the EVA generated by the company?