CASE STUDY

Section $-C{?}_{(})$

$10000$ Crores in a new project. The Compds, located in Karnataka. The company planning to invest Rs company wants to raise Rs $6000$ Crores by the has anthorized capital of Rs $15000$ Crores, however, share issued at a premium of Rs $\frac{200}{?}$ by the issue of shares to the public with a face value of Rs $5/-$ per issue shares to public through a boor$-$ per share. The Company received the permission from SEBI to debentures of Rs $4000$ Crores@$14\%-$building process $($IPO$).$ The Company further wants to issue The Company will be investing Rs $7000.$ the Cost of raising equity would be at a rate of $18\%.$

assets including Land and Building $700$ Crores in Plant and Machinery and Rs $2500$ Crores in other fixed annual working capital requirement and Rs $1500$ Crores to be kept in Cash and Cash equivalents. The investment of $25\%$ over $8$ years. The Company is Rs $500Cr.$ The Company is expecting a return on company plans to keep $70\%$ of PAT as retaine follows a straight$-$line method of Depreciation and the to the shareholders.

With the above information company wants to seek your suggestion on the financial viability of the Project based on the following Capital budgeting Techniques:

a$.$ Show the Balance sheet of the Company and suggest whether the investment$/$Project is viable. Justify it with NPV$,$ Payback Period, Discounted Payback Period, and Profitability Index, and comment on the company's investment decision.

b$.$ Has the company taken the right financing decision or some better financing decisions could have been taken? Justify your suggestions from the cost of capital and leverage decisions point of view