1 a Discuss "Why there is a time preference for money?" 5 b Calculate the compounded value of Rs 15,000 at the end of 4 years at 12% rate of interest 5 when the interest is calculated on a) quarterly basis, b) Bi-annual basis C Is the wealth maximization being superior to Profit maximization? Justify. 10 2 a Discuss three types of leverages 5 b X ltd is considering three different plans to finance its total project cost of Rs100 lakh A, B and C. 5 (Rs in lakhs) Particulars Plan A Plan B Plan C Equity Capital 50 34 25 (Rs100 per share) 10% Debentures 50 Total Capital 100 66 100 75 100 Sales for the year is estimated at Rs 125 Lakhs and a 10 percent profit before interest and taxes is forecast. The tax is to be taken at 35%. Compute EPS in all the three alternative financing plans. c Discuss five important factors to be considered for determining capital structure 10 3 a A company raised preference share capital of Rs: 1,00,000 by issue of 10% redeemable preference shares having redemption period of 12 years are issued at 10% premium. The underwriting costs 2%. Calculate effective cost of preference share capital. 5 b Discuss the importance of cost of capital 5