FIN622 Corporate Finance Assignment 01 Fall 2020 Solution / Discussion

[+ M.Tariq Malik]

FIN622 Corporate Finance Assignment 01 Fall 2020 Solution / Discussion

[+ M.Tariq Malik]

Share the Assignment Questions & Discuss Here.... 

[+ M.Tariq Malik]

FIN622 Assignment 1 Fall 2020 Solution:

Download attachment for FIN622 assignment 1 solution file.

FIN622_Assignment_No_01_Solution_Fall_2020

[+ M.Tariq Malik]

FIN622 Corporate Finance | Assignment 1 Solution | Fall 2020 | vu virtual university |

FIN622 Corporate Finance | Assignment 1 Solution | Fall 2020

[+ M.Tariq Malik]

FIN622 – Corporate Finance

Assignment No. 1 - Fall 2020

 

Solution of requirement 1 and 2:

Variables Rs.	Policy X			Policy Y
	Recession	Normal	Boom	Recession	Normal	Boom
Sales	190,000	240,000	360,000	190,000	240,000	360,000
Variable Cost	133,000	168,000	252,000	161,500	204,000	306,000
Fixed Cost	60,000	60,000	60,000	20,000	20,000	20,000
Contribution Margin.(Sales-V.Cost)	57,000	72,000	108,000	28,500	36,000	54,000
Profit before interest and tax (Contribution Margin-Final Cost)	(3,000)	12,000	48,000	8,500	16,000	34,000
Degree of operating leverage = Contribution margin/PBIT	(19)	6	2.25	3.35	2.25	1.59

 

Solution of requirement 3:

Economic Condition	Higher Degree of Operating Leverage
Recession	Policy Y
Normal	Policy X
Boom	Policy X

 

Solution of requirement 4:

Under policy X, the profitability of the company gets less affected due to changes in the economic condition because under policy X the variable cost is less and Profit is higher at BOOM economic condition.

 

 

 

[+ M.Tariq Malik]

FIN622 Assignment 1 Fall 2020 Solution:

Download attachment for FIN622 assignment 1 solution file.

FIN622_Assignment_No_01_Solution_Fall_2020