Professional Documents
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The selling price of each ordinary share is Tk. 50. In the next year the company will declare Tk. 4
as dividend and the dividend will grow at a constant growth rate of 7 %. The tax rate of the
company is 40 %.
a) Which shareholders have the claim at last in case of company liquidation?
b) What is the cost of capital?
c) What is the cost of ordinary share?
d) Calculate WACC for ZAK Company Limited.
2. Mr. Aovi has taken an insurance policy of Tk. 25 Lac for his personal car. The car was damaged
due to accident. Aovi claimed insurance coverage and the insurance company paid in full policy
value. The damaged car was sold at Tk. 10,000 at Dholaikhal to a businessman. Mr. Aovi claimed
the salvage value of the vehicle, but the insurance company refused his claim.
a) What is risk?
b) What is liability insurance?
c) Under which principle of insurance business Mr. Aovi was compensated? Explain.
d) Why did the insurance company refused the last claim of Mr. Aovi? Justify.
3. Knowledgeable Questions:
i) How many prime sources of capital?
ii) If floating cost increases, which cost is increased?
iii) What is IDRA?
iv) What is understood by insurable interest?
v) What is premium?
Set- C
1. Kanchon Ltd. Company in order to increase capital has issued 12% Preferred stock having face
value of Tk. 5000, whose market value is Tk.4,500 and selling cost is Tk.250. The expiration date
is 5 years from the date of issue. On the other hand, the company can issue 15% Debenture whose
market value is Tk. 4800. The face value/ written price is Tk. 5,000 and the floatation cost is
Tk.200, having a maturity of 5 years. The tax rate is 40%.
a) What is the cost of capital?
b) What additional advantage a company gets when the company issues debenture instead of
Preferred stock?
c) Calculate the cost of capital of Preferred stock.
d) What will be the impact on financial condition, according to the stem if the company issues
Debenture instead of Preferred stock?
2. Mrs. Taslima has taken an insurance policy of Tk. 30 Lac for her personal car. The car was fully
damaged in an accident. The insurance company had paid the claim after she claimed
compensation from the company. A businessman from Comilla purchased the damaged car at
Tk.20, 000. Mrs. Taslima claimed the amount that was received from selling the damaged car but
the insurance company refused to make payment of that amount.
a) What is insurable interest?
b) What is understood by uncontrollable risk?
c) In the above stem, based on which principle of insurance business Mrs. Taslima received
compensation? Explain
d) Justify the reason behind not to make any payment to the last claim of Mrs Taslima mentioned
in the above stem.
3. Knowledgeable Questions:
i) What is the full meaning of IDRA?
ii) What is the main motive/matter of insurance?
iii) Define insurance contract.
iv) What is the sign of Preferred stock?
v) Which share is called Hybrid share?