$1.$ M$/$s Anuradha Ltd$.$ has a long$-$term fund requirement of Rs$.45$ lacs for putting up a new

manufacturing unit.

The following options of funding are available.

a$)$ It can raise a perpetual debt @ an interest rate of $9\%$ p$.$a$.$

b$)$ It can issue bonds of Rs$.100$ each, at a discount of $10\%.$ Coupon rate of $6\%.$ Bonds have

a term of $5$ years.

For Theoretical Answer

Assessment Parameter Weightage

Introduction $20\%$

Concepts and Application

related to the question

$60\%$

Conclusion $20\%$

For Numerical Answer

Assessment Parameter Weightage

Understanding and usage

of the formula

$20\%$

Procedure $/$ Steps $60\%$

Correct Answer &

Interpretation

$20\%$

NMIMS Centre for Distance and Online Education $($NCDOE$)$

Course: Corporate Finance

Internal Assignment Applicable for September $2024$ Examination

Page $2$ of $3$

c$)$ Issue Preference shares at a discount of $5\%,$ redeemable at par after $6$ years. Rate of

Dividend is $8\%$

d$)$ Invest retained earnings to the extent of $50\%$ and take a loan from the bank for the

balance at $8\mathrm{.}5\%$ interest rate for a period of $4$ years. Equity holders expect a return of

$15\%$ from the business.

Corporate Tax rate is $30\%.$

Which option would the firm choose? What should be some of the factors that a company

should consider while raising Debt from the market $($mention any $4$ factors$)$