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CHAPTER 2 1. As a rule of thumb, real rates of interest are calculated by subtracting the inflation rate from the nominal rate. What is the error from using this rule of thumb for calculating real rates of return in the following cases? Nominal rate (%) 7 12 18 22 Inflation rate (%) 4 6 8 10 Solution: Nominal rate(%)(NR) 7 12 18 22
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CHAPTER 2 1.As a rule of thumb, real rates of interest are calculated by subtracting the inflation rate from the nominal rate. What is the error from using this rule of thumb for calculating real rates of return in the following cases? Nominal rate (%)711! nflation rate (%)# \$ !1 Solution:  Nominal rate(%)(N&)711! nflation rate(%) ( &)#\$!1&eal rate by the rule of thumb(%)'orrect rate(%)(1N&)*(1 &)+11,\$1.!!-.\$\$.\$1.11./rror from using the rule of thumb(%).1.,#.7# .As a rule of thumb, real rates of interest are calculated by subtracting the inflation rate from the nominal rate. What is the error from using this rule of thumb for calculating real rates of return in the following cases? Nominal rate (%)#!111 nflation rate (%)1  # Solution:  Nominal rate(%)(N&)#!111 nflation rate(%) ( &)1,#&eal rate by the rule of thumb(%)'orrect rate(%)(1N&)*(1 &)+1.-!/rror from using the rule of thumb(%).,.1-.1!.7#.!-!.!1#.#1-,-  CHAPTER 3 1.At the end of 0arch, \$ the balances in the 2arious accounts of 3honi 4 'om5any are as follows6   Rs. in million Accounts Balance /uity ca5ital 18reference ca5ital 9i:ed assets (net) 17&eser2es and sur5lus 'ash and ban; -3ebentures (secured) 10ar;etable securities 1!<erm loans (secured) &ecei2ables =hort+term ban; borrowing (unsecured) 7 n2entories1<rade creditors \$8ro2isions 8re+5aid e:5enses 1&euired6 8re5are the balance sheet of 3honi 4 'om5any as 5er the format s5ecified  by the 'om5anies Act.  Solution:  Balance Sheet of Dhoni & Company As on March 31, 20  !  LiabilitiesAssets =hare ca5ital9i:ed assets   /uity1Net fi:ed assets178reference   &eser2e 4 sur5lus n2estments   0ar;etable securities 18 =ecured loans'urrent assets, loans 4 ad2ances   3ebentures1   <erm loans  Pre-paid expenses10 >nsecured loans n2entories1=hort term ban; borrowing7&ecei2ables'urrent liabilities 4 5ro2isions'ash 4 an;  35 <rade creditors\$   8ro2isions      \$   \$.At the end of 0arch, 7 the balances in the 2arious accounts of =ania @imited are as follows6   Rs. in million Accounts Balance /uity ca5ital -8reference ca5ital !9i:ed assets (net)!&eser2es and sur5lus-'ash and ban;13ebentures (secured)10ar;etable securities <erm loans (secured)1&ecei2ables#=hort+term ban; borrowing (unsecured) 11 n2entories1<rade creditors 8ro2isions 78re+5aid e:5enses &euired6 8re5are the balance sheet of =ania @imited as 5er the format s5ecified by the 'om5anies Act. Solution:  Balance Sheet of Sania imite# as on March 31, 20  \$  LiabilitiesAssets  =hare ca5ital9i:ed assets   /uity-Net fi:ed assets!8reference!   &eser2e 4 sur5lus- n2estments   0ar;etable securities 30 =ecured loans'urrent assets, loans 4 ad2ances   3ebentures1   <erm loans1   8re+5aid e:5enses 20 >nsecured loans n2entories1=hort term ban; borrowing11&ecei2ables#'urrent liabilities 4 5ro2isions'ash 4 an;  100 <rade creditors    8ro2isions7   1\$   1\$.<he com5arati2e balance sheets of /2ergreen 'om5any are gi2en below6  %Rs. in million'(ners) *+uity an# iailities As on 31.3.20! As on 31.3.20\$  =hare ca5ital 7 7&eser2es and sur5lus # !@ong+term debt ! =hort+term ban; borrowings ! !-<rade creditors # 78ro2isions 1 <otal#1-  Assets 9i:ed assets (net)11 n2entories  -3ebtors \$ \$-'ash - ther assets - 1-<otal#1-<he 5rofit and loss account of /2ergreen 'om5any for the year ending 1 st  0arch 7 is gi2en below6  %Rs. in million -rofit & oss Account for the -erio# 1..20! to 31.3.20\$   Net sales7-'ost of goods sold -- =toc;s Wages and salaries1- ther manufacturing e:5enses11#-Bross 5rofit5erating e:5enses1-=elling, administration and general13e5reciation 1-5erating 5rofit11 Non+o5erating sur5lus or deficit()/ <  nterest -8rofit before ta: \$-<a: 1-8rofit after ta: -
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