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MS-42 Solved Assignment

MS-42 Solved Assignment

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  • Version: 2021 Jan - June

Soft Copy: Yes
Downloadable File: Yes
University: IGNOU
Course: Master of Business Administration

Q&A of Mba MS-42 Solved Assignment 2021 - Capital Investment and Financing Decisions

Q. Explain the concept of Cost of Capital. How is the cost of capital for various individual components of capital computed and aggregated to compute the weighted cost of capital?


Q. What do you understand by Economic Appraisal? List out the various factors taken into consideration while performing a Social Cost Benefit analysis of a project.


Q. Explain the various techniques used for measurement of project risk.


Q. What are the various instruments through which the firms procure finance? For each of these instruments discuss when and why they should be used to raise capital. Also explain non traditional sources of long term financing used by firms.


Q. What is dividend? Explain the various dividend theories. Discuss the factors influencing dividend policy.


Product Details: MS-42 Solved Assignment 2021 - Capital Investment and Financing Decisions

Course: Ignou MBA (Master of Business Administration)
Session: Jan - June 2021

Old Sample Answers of Mba Ignou MS-42 Assignments

Q. What is Capital Structure?
Answer. Capital structure is the manner in which a company is capitalised (i.e., the proportion of debt, equity, and other sources through which the company finances its investments and core assets). The optimal capital structure is one in which the firm has least risk and least cost in order to maximise firm value and hence shareholder wealth........

The amount of debt a company has relative to its equity is often determined by the way in which it finances its investments over time............ A company with a propensity to finance its investment projects with debt would in time have a higher debt-to-equity ratio than a company that tends to finance its investment by selling new stock or by retaining its earnings.......... Sometimes, however, changes in a company's capital structure occur as a result of a merger.........

Many companies are acquired by private equity or leverage buyout companies or other corporations that financed the acquisition by issuing bonds. In many of those cases, the major difference between the old company and the new one is that the later company just had more debt......... Get Ignou Mba MS-42 Solved Assignment 2021 Jan - June Capital Investment and Financing Decisions..........

In deciding on the right capital structure for a company, shareholders and management must balance the risk of default in repaying debt with the availability of equity capital to pursue growth opportunities. Some emerging growth and middle-market companies may find it easier to obtain debt than equity, making this decision more difficult (when what they really need is equity)........

If a growth company is too conservative and does not leverage its equity to provide increased capital to invest, it may miss market opportunities and actually erode the overall value of the business by becoming a lesser player in the market-market position and share weigh into company valuation........

However, being too aggressive and overleveraging the company may lead to missed financial performance and business failure when things do not go exactly according to plan.

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