NORTH SOUTH UNIVERSITY Tks
SCHOOL OF BUSINESS & ECONOMICS (SBE)
TOTAL: 55 MARKS
1| Following are the information given for Cafes Richard Bangladesh
Cafés Richard Bangladesh
2020 Income Statement
Net sales Tk. 5,680,000
Cost of goods sold (4,060,000)
Depreciation (420,000)
Earnings before interest and taxes 1,200,000
Less: Interest paid (30,000)
Taxable Income 1,170,000
Less: Taxes (410,000)
Net income Tk. 760,000
Dividends 500,000
Cafés Richard Bangladesh
Comparative Balance Sheets
2019 2020 2019 2020
Cash 70,000 180,000 Accounts payable 1,350,000 1,170,000
Accounts rec. 980,000 840,000 Long-term debt 720,000 500,000
Inventory 1,560,000 1,990,000 Common stock 3,200,000 3,500,000
Total Current Assets 2,610,000 3,010,000 Retained earnings 940,000 1,200,000
Net fixed assets 3,600,000 3,360,000
Total assets 6,210,000 6,370,000 Total liabilities & equity 6,210,000 6,370,000
Required
a. Calculate cash flow from assets for 2020; (5)
b. What is the Internal Growth rate for Cafes Richard BD? What is the sustainable growth rate for Cafes
Richard? If sales grow at SGR, how much External Financing will be needed for the year 2021 using
Percentage of sales approach, assuming that the firm is operating at full capacity? Depreciation will
change. Interest expense and tax rate will not change. Calculate the tax rate (hint: tax rate = tax/taxable
income). Please create pro forma statements as well. What’s the impact in the new Debt to equity ratio, if
any? (4+4+4+4=15)
2. Comment on the Profitability of the foreign company that has been assigned to your group. Use Gross profit
margin, Operating profit margin and net profit margin for 2020 info (6).
a. Financial information can be gathered from WSJ, Yahoo finance or [Link]
b. What is P/E of your local company (the assigned BD company). Do think the P/E is high or low? Compare
it with that of industry leader (you choose the company) (5)
FIN440 Mid# 1
3. Today is December 31, 2016. Mr. Saydul Karim wants to go for his 4 years PhD program to be started at the
beginning of 2020. Checking the University’s website, Saydul found that the current monthly tuition fee for
the program is Tk. 80,000, which is to be paid at the beginning of every month. There are 2 semesters each
year and each semester is 4.5 months long. Given the fact, annual Inflation won’t impact his tuition fees
during the 4 years PhD program. The effective annual rate (EAR) is 9% for any savings.
Required
a. Draw the timeline of the tuition fees. Also, What is the total tuition fee (2)
b. Saydul wants to pay-off the entire tuition fees in the very beginning of 2020, when his classes start.
How much money does Saydul have to invest at the beginning of each year from today onwards to
have his entire tuition fees ready at the beginning of his PhD program (5)
c. Assume that Saydul will get 20% scholarship on the total tuition fees of the 4 years PhD program.
Currently, he has opened a savings account with Tk. 50,000 deposited, which is compounded on a
yearly basis at 10% APR. If he wants to fund the remaining of the tuition fees with end of the year
deposits, what should be the amount of each deposit? (5)
4. Suppose you have taken a loan of $3,500,000 for 3 years, compounded yearly. The quoted rate is 15%.
Required
a. With the given information what should be the equal annual payments you would be making to the
bank? (3)
4| you would like to have $88,000 in your account 10 years from now to buy a brand new BMW. To that effect,
you would like to make three separate deposits in your saving account that pays 8% annual interest rate, which
compounds monthly. If you make the first deposit of $15,000 now (for 10 years) and a $10,000 deposit 5-years
from now , what would be the third deposit you need to make 7 years from now so that you can have that $88,000
to buy that car. All investments are single deposit investments. (5).
5. A company has a profit margin of 8.8%, total asset turnover of 3.7, assets of $88, 000 and liabilities of $25,
000. How would the ROE change if profit margin increases to 9.5%, sales decrease by 5% and all balance sheet
items stay the same? (4)