Financial Case Study Assignment on Nahid Corporation.
Need assignment answer on Nahid Corporation focuses on calculating its overall cost of wealth. The firm is in the 40% tax bracket. The results of the current inquiry are as follows: Debt: The firm can lift debt by retail TK 200,000-par-cost, 20% coupon interest rate, and 20-year bonds on which annual interest payments will be made. An average reduction of TK 4,000 per bond must be given to sell the issue. The firm must also pay flotation costs of TK 3,000 per bond. We provide case study assignment services in Australia, the USA, the UK and worldwide.
Case Study 1
Nahid Corporation is interested in measuring its overall cost of capital. The firm is in the 40% tax bracket. Current investigation has gathered the following data:
Debt: The firm can raise debt by selling TK 200,000-par-value, 20% coupon interest rate, 20-year bonds on which annual interest payments will be made. To sell issue, an average discount of TK 4,000 per bond must be given. The firm must also pay flotation costs of TK 3,000 per bond.
Preferred stock: The firm can sell 15% (annual dividend) preferred stock at its TK 15,000-per- share par value. The cost of issuing and selling the preferred stock is expected to be TK 400 per share.
Common stock: The firm’s common stock is currently selling for TK 15,000 per share. The firm expects to pay cash dividend of TK 900 per share next year. The firm’s dividend has been growing at an annual rate of 9%, and this rate is expected to continue in the future. The stock will have to be underpriced by TK 600 per share and flotation costs are expected to amount to TK 900 per share.
Retained earnings: The firm expects to have TK 32,500,000 of retained earnings available in the coming year. Once these retained earnings are exhausted, the firm will use new common stock as the form of common stock equity financing.
- Calculate the individual cost of each source of
- Calculate the firm’s weighted average cost of capital using the weights shown in the following table.
| Source of Capital | Weight |
| Long-term debt | 35% |
| Preferred stock | 10% |
| Common Stock equity | 55% |
| Total | 100% |
Case Study 2
Suppose, you are the financial manager of Raihan Corporation. You have got an assignment form the board of directors to compare Raihan Corporation’s financial performance between the year of 2022 and 2023. Raihan Corporation’s comparative financial statements of 2022 and 2023 are given below:
Comparative Income Statement of Raihan Corporation
2023 (Taka)2022 (Taka)
| Sales | 5,834,400 | 7,035,600 |
| Cost of goods sold | 4,980,000 | 5,800,000 |
| Other expenses | 720,000 | 612,960 |
| Depreciation | 116,960 | 120,000 |
| Total operating costs | 5,816,960 | 6,532,960 |
| Earning before interest
and tax (EBIT) |
17,440 | 502,640 |
| Interest expense | 176,000 | 80,000 |
| Earning Before Tax
(EBT) |
-158,560 | 422,640 |
| Taxes (40%) | -63,424 | 169,056 |
| Net income | (95,136) | 253,584 |
Comparative Balance Sheet of Raihan Corporation
Assets 2023 (Taka) 2022 (Taka)
| Cash | 7,282 | 14,000 |
| Short Term investment | 20,000 | 71,632 |
| Accounts Receivable | 632,160 | 878,000 |
| Inventories | 1,287,360 | 1,716,480 |
| Total Current Asset | 1,946,802 | 2,680,112 |
| Net Fixed Asset | 939,790 | 836,840 |
| Total assets | 2,886,592 | 3,516,952 |
Liabilities And Equity
| Accounts payable | $324,000 | $359,800 |
| Notes payable | 720,000 | 300,000 |
| Accruals | 284,960 | 380,000 |
| Total Current Liabilities | 1,328,960 | 1,039,800 |
| Long-term debt | 1,000,000 | 500,000 |
| Common stock | 460,000 | 1,680,936 |
| Retained earnings | 97,632 | 296,216 |
| Total common equity | 557,632 | 1,977,152 |
| Total Liabilities & Equities | 2,886,592 | 3,516,952 |
Other Data
2023 2022
| Stock price | TK 6.00 | TK 12.17 |
| Number of shares | 100,000 | 250,000 |
| EPS | (TK 0.95) | TK 1.01 |
| DPS | TK 0.11 | TK 0.22 |
| Book value per share | TK 5.58 | $7.91 |
| Lease payments | TK 40,000 | TK 40,000 |
| Tax rate | 40% | 40% |
Analyze its overall financial situation from a time-series viewpoint. Break your analysis into evaluations of the firm’s liquidity, activity, debt, profitability, and market.
Question:
- Prepare a flexible budget for The Little Theatre based on the actual activity of the year.
- Prepare a flexible budget performance report for the year that shows both activity variances.
