Online Help, Guidance and Solutions for Virtual University of Pakistan Students
FALL SEMESTER 2015
Financial Management (MGT201)
Due date: 3rd February, 2016 Total marks: 10
? To make students learn the application of capital structure theories
? To make students develop skills to determine the optimal capital structure for firms under the
framework of capital structure theory
? After doing this assignment, Students will be able learn the application of capital structure
theories on the financing decisions of firms.
? Use only given “solution format” to solve the question. Word file of “Solution format” is available
in “downloads” section of VULMS.
? Assignment will be marked as ZERO if NOT followed the given format .
? Make sure to upload the solution file before the due date on VULMS.
? Any submission made via email after the due date will not be accepted.
? Use the font style “Times New Roman” or “Arial” and font size “12”.
? It is advised to compose your document in MS-Word format.
? You may also compose your assignment in Open Office format.
? Use black and blue font colors only.
? Use APA style for referencing and citation. For guidance search “APA reference style” in Google and read
various websites containing information for better understanding or visit
Rules for Marking
Please note that your assignment will not be graded or graded as Zero (0), if:
? It is submitted after the due date.
? The file you uploaded does not open or is corrupt.
? It is in any format other than MS-Word or Open Office; e.g. Excel, PowerPoint, PDF etc.
? It is cheated or copied from other students, internet, books, journals etc.
? 24 hours extra / grace period after the due date is usually available to overcome uploading difficulties. This
extra time should only be used to meet the emergencies and above mentioned due dates should always be treated as final to avoid any inconvenience.
Note related to load shedding: Please be proactive
As you know that Pre Mid-Term semester activities have started and load shedding problem is also prevailing in our country. Keeping in view the fact, you all are advised to post your activities as early as possible without waiting for the due date. For your convenience; activity schedule has already been uploaded on VULMS for the current
semester, therefore no excuse will be entertained after due date of assignments, quizzes or GDBs.
The ABC Company, a 100% equity firm, has been manufacturing electrical home appliances for many years. They are planning to expand their production capacity to meet the increasing demand of home appliances. They require Rs. 5, 00,000 for the installation of new factory that expects to yield annual earnings before interest and tax (EBIT) of Rs. 100,000. The company is having 10,000 outstanding shares. The current market value of share is Rs. 70. The company is planning to issue both equity and debt to finance this new factory. The funds can be raised through debt at following rates:
Amount of debt (D) Cost of debt (r
200000 4% 300000 4.5% 400000 5% 500000 6.7%
The corporate tax rate is 30%.
Assuming cost of equity (r
Amount of debt (D) Cost of equity (r
100000 11% 200000 11.5% 300000 12.7% 400000 17.5% 500000 24%
of shares and weighted average cost of capital (WACC
(V), market value of shares and weighted average cost of capital (WACC
Following format should be followed to answer the above questions:
Fill those columns with available data in question and then calculate all the unknown variables in their respective column
Debt Cost of Cost of EBIT Net Market Market WACC MV of
Write the Effect of debt on following variables:
Market value of equity (E)
Write the answer in the corresponding column of each heading
Total Market value of firm (V)
Market value of shares
Weighted average cost of capital (WACC)
Determine the optimal capital structure for the firm? Optimal capital structure:
(write the optimal amount of
debt and optimal financial
leverage (optimal debt ratio) in
Why it is an optimal capital
structure for firm? (state the
reasons in corresponding
Market value of equity
Total market value of firm
kisi ka bhi mgt201 nahi hey ???
all students read lecture number 34 and 35 .
34 mein tou kuch bhie nahin mila assignment related... :(
Jnab yeh assignment nahi ki kisi ne kia????
Please bta do ???. today is the last day for submission...
NO one has done i think :(
sis, I can you a format of APA style writing as high lighted in instruction of assignment.
"APA reference style"