Accounting Theory 6-2023-1

Suggestion
Department: Accounting (Final Year)

Sub: Accounting Theory
MD. OLEUR RAHMAN (Oli Sir)
Mobile No- 01813-019385
S.L Name of chapter For Part B For *** *****
Part C
7 Earning….. ***** ** 1,2,4,3,9 1,4,9
9 Contingencies…. *** * 1,2,4,3,6 1,2,6
10 Fair….. *** 7,8,9,10,11 7,8,11
12 Capital….. ***** 1,5,6,3,7,8,9,11 1,6,8,11
13 Test….. ***** ***** 2,4,3,5,7,10,11 4,7,11,10
14 Intangibles *** 1,2,4,3 1,2,4
15 Valuation ***** 1,2,3,7,9,10,12,15 4,7,10,11
***** অ । 50-60 ।
2019,২০১৮,২০১৭,২০১৬,২০১৫ ২০১৪ nu question ।

2020 । কম । ক কম -
ক ।
১০০% ক । ।
***** ক 10, 12, 13, 15 ক ।
*** যানের অবস্থা অননক োরাপ পাস করনে পারনবন না, োরা আমার সানে থযাগানযাগ করুন।
সহ্ােো করব ইনিা-আল্লাহ্। কারন NU থে পাস করা অননক সহ্জ প্রকন্তু ভাল থরজাল্ট করা কটিন।
অনলাইননর সবনেনে জনপ্রিে প্রবপ্রবএ এর প্রিক্ষক অপ্রল সযানরর হ্যান্ডননাট থেনক মাত্র ৫ টট অংক
কনর প্রিনে প্রনন অধ্যানের সব প্রনেম। সানজিন সংগ্রহ্ করনে কল করুন ০১৮১৩-০১৯৩৮৫
Chapter-7: Earning Management
Problem 1
Firm A has sales of 2,00,000 at a Tk. 4 per unit. Variable operating cost of Tk.3.30 per unit and Fixed
Cost of Tk. 12,000 interest is TK. 20,000 per year
Firm B has sales of 2,00,000 units at 5. per unit. Variable operating cost of 2per unit.
Fixed operating cost or IK. 90,000 interest is Tk. 30,000 per year.
Assume the both firm are in 40% tax bracket:
(a) Compute DOL, DFL and DTL A and B.
(b) Compare the relative risks of the two firms.
Problem 2
ABC company recently sold 10,000 units at taka 7.50 per unit. Annual fixed cost is Tk. 20,500 and
variable cost per unit is taka 3.00. Annual interest charges on debt capital of Taka 1,00,000 at 8% and
firm has 12% preference stock of Tk. 50,000. The company currently has 2,000 shares of Common
stock. Assume that the company is in 40% tax bracket. Total Assets Tk. 5,00,000 You are required to
(a) Calculate the degree of operating, financial and total leverage;
(b) Calculate the earning per share (Eps) at:
(i) Current level of sales; (i i)12,000 units of sales; (i i i) 15,000 units of sales.
(c) ROE & ROI
(d) Financial Break even point
*** ROE = (EAT/Equity Capital)x100

*** ROE = (EAT/Total Assets)x100
*** Financial Break even point = Interest/(1-T)
Problem 3
The capital structure of ABC Ltd is composed of common stock capital of Tk 1,00,000 (1,000 shares
@ 100 each) and 15% debenture of TK 2,00,000. Corporate Tax rate of the company is 25%. The
company’s last year data were as follows:
Sales 20,000 units @ 10 Tk each
Variable cost @ Tk 4 each
Fixed cost Tk 70,000
Required:
a. What are the degree of operating leverage, financial leverage and total leverage?
b. What will be the impact of increasing sale by 40% and 60%?
Problem 4
The SS company’s most recent balance sheet was as follows:
Liabilities Amount Assets Amount
Equity capital (Tk.10 per share) 60000 Net fixed assets 1.50.000
10% Long-term Debt 80000 Current Assets 50,000
Retained Earnings 20000
Current Liabilities 40000
2,00.000 2,00.000
The Company’s total assets turnover ratio is 3, its fixed operating costs are Tk. 1,00,000 and the
variable Operating costs ratio is 40 percent. The income tax rate is 35 percent.
On the basis of above information.
(a) EPS
(b) Determine the likely level of EBIT if EPS is (i) Tk. 1. (ii) Tk. 3 and (ii) Zero.
Problem 5
The information of company A and B 1s given below. You are required to calculate the financial
statement of The company
Particulars Company A Company B
Variable cost 9% of sales 70% 49%
Interest expenses Tk. 10,000 Tk. 15,000
DOL 3 times 4 times
DFL 1.50 times 1.75 times
Number of share 1,000 1.500
Corporate tax 40% 40%
Problem 6
The present capital structure of a textile mills Ltd composed by 20,000 Shares of common stock of Tk
100 each and debt 20 lac at 8%. The company needs an additional amount of Tk 35 lac and they have
following three alternatives.
A-1 : 2000 shares of Tk 200 each rest tof the amount by preferred stock at 11%.
A-2 : 4,000 debentures of Tk 200 each at 8% and 10 lac preferred stock and rest the
amount by common stock of Tk 200 each.
A-3 : 5,000 common stock of Tk 200 each and rest of the amount by 12 % debenture.
Expected EBIT is TK 7,50,000. Tax rate is 30%.
Required: a) Return on equity. b) Return on investment.
Problem 7
You are given the following information of alfa Ltd:
Sales 50,000 units
Selling price per unit Tk 30
Variable cost per unit Tk 15
Fixed operating cost Tk 3,50,000
Total assets Tk 12,00,000
Share capital ( Tk 10 per value) Tk 7,00,000
10% debt capital Tk 5,00,000
Corporate Tax rate 50%
Proposed increase in sale by 25% (in term of unit)
Instruction : calculate EPS and ROA at both levels.
Problem 8
Square Ltd recently sold 20,000 units of X tablet at TK 25 per unit where variable cost per unit TK 10
and annual fixed operation cost for the company is Tk 1,50,000.
The capital structure of the company is as follows:
Common stock (20,000 shares @ TK 100 Each) TK 20,00,000
10% debt TK 2,00,000
5% preferred share TK 8,00,000
Total: 30,00,000
Assume that the company is in the 50% Tax.
You are required to calculate :
The break even point (BEO) and show the graph.
The EPS at (i) current level sales. (ii) 2,500 units of sales.
Problem 9
On January 1, 2014, NAHAR Company's outstanding shares included the following:
2.80,000 shares of Tk. 50 per shares, 7% cumulative preferred stock 9,00,000 shares of Tk. 1 per
value common stock. Net income for 2014 was Tk. 25,30,000. No cash dividends were declared or
paid during 2014. On February 15, 2015. however, all preferred dividends in arrears were paid,
together with a 5% stock dividend on common shares. There were no dividends in arrears prior to
2014. On April 1, 2014, 4,50,000 shares of common stock were sold for Tk. 10 per share and on
October 1, 2014, 1,10,000 shares of common stock were purchased for Tk. 20 per share and held as
treasury stock. Required : Compute earning per Share for 2014
Problem 10
At December 31,2017. The BD Corporation had 50,000 shares of common stock issued and
outstanding, 40,000 of which had been issued and outstanding throughout the year and 10,000 of
which had been issued on October 1, 2017. Operating income before income taxes for the year
ended December 31, 2017 was TK 4,68,800 in 2017 a dividend was paid on 40,000 shares of 7%
preferred stock 10 per. On April 1, 2018, 15,000 additional shares were issued. Total income before
income taxes for 2018 was 4,77,000.
a) Which included as extraordinary gain before income taxes of TK 37,000. Assuming a 40%
TAX RATE.
b) What is BD’s earning per share (EPS) for 2017 and for 2018? Show consumptions in good
form.
Problem 11
A production company has 16,000 equity shares of Tk100 each in its present capital structures;. The
company needs Tk 25 lac for extensions of their project. So they are considering the following
method of finance.
Alt-1 10,000 equity shares of Tk 200 each and rest 10% on bond.
Alt-2 14% On loan and rest 10% preferred stock.
Alt-3 20,000 debenture of Tk 50 each at 8% interest and rest of the amount by equity shares of Tk
200 each.Expected EBIT is 5,90,000 tax rate 30%.
Calculate: a. Eps b.Return on equity c.Return on investment.
Problem 12
Present capital structures of jewel shoe company Ltd. Is given below:
Company needs Tk 40 lac for extension of their plant. So they are considering the following
alternatives;
A-1 Tk 20 lac debt and Tk 20 lac ordinary share
A-2 10 lac p stock.; 15 lac debt and 15 lac ordinary shares
Expected EBIT is Tk 8,50,000 Tax rate is 20%. Rate of interest is 12 %;; P. stock dividend is 6%
Price per ordinary share is Tk 100.
Required:
a. EPS b. Make comment on the basis of EPS.
Rules
1. DOL =
2. DFL =
3. DTL/DC: = DOL X DFL
4. BEP(unit) =
5. BEP(Tk) = BEP in unit X SPU
6. EPS =
7. ROI = X 100
8. Effect of DOL : DOL X increase in sale = increase in EBIT
9. Effect of DFL = DFL X increase in EBIT = Increase in EPS
10. Effect of DTL : DTL X increase in sales = Increase in EPS
9. Current Liabilities and Contingencies
Part-C
Problem-1
On July 1, 2016 the ledger of Siam hardware/Sayem software Ltd. Contains the following liability
accounts:
Accounts payable Tk. 4,25,000;
Sales tax payable Tk. 58,000;
Unearned service revenue Tk. 1,50,000.
During the month of the following selected transactions occurred:
July 1 Borrowed Tk. 1,50,000 in cash from IFIC Bank Ltd. On a 4 months @ 12% 1,50,000 note.
5 Sold merchandise for cash totally Tk. 78,000 which includes 4% sales tax.
12 Provide service for customers who has made advance payment of Tk. 90,000 (credit service
revenue).
14 Paid sales tax to government collected in December 2014. Tk. 58,000.
20 Sold 500 units of a new product on credit at Tk. 520 unit, plus 4% sales tax, This new product
is 1 Year warranty.
25 Sold for cash totally Tk. 1,14,400 which included 4% sales tax.
Instructions : Journalize the above transactions.
Problem-2
On January 1, 2012 the ledger of Angel Software company contains the following current liability
Accounts:
Accounts payable Tk. 60,000;
Sales tax payable Tk. 10,000;
Unearned Service revenue Tk.20,000.
During January, the following transactions occurred :
January 1. Sold merchandise for cash Tk. 17,600 which include 10% sales tax.
6: Provided services for customers who had paid cash in advance Tk. 16,000.
12: Paid sales tax collected in December, 2011 Tk. 10,000.
16: Borrowed Tk. 24,000 @ 10% of a 3 month note.
20: Sold 500 units of a new product on credit @ Tk. 60 per unit plus 10% Sales tax
subject to one year warranty expected cost at 8%.
31: Sold merchandise for cash Tk. 11,000 which includes 10% sales tax.
Required :
a. Journal
b. Adjusting entries ongl-1-2012 for interest and warranty cost
c. Shown the current liabilities in the balance sheet on 31-12-2012.
Problem-3
The following are selected 2014 transaction of Tanin Enterprise :
Sept. 1 Purchased inventory from Econo Company on account for Tk. 50,000. Tanin Records
purchases gross and uses a perpetual inventory system.
Oct.1 Issued a Tk. 50,000, 12 months, 8% Note to Econo Company in payment of Account
Nov 1 Borrowed Tk. 50,000 from the Jamuna Bank by signing a 12 months, Zero-Interest bearing
Tk. 54.000 note.
Dec 1 The board of directors declared a Tk. 30,000 cash dividend that will be Payable on January
10, 2015, stockholders record date December 31, 2014.
Required:
Make all the journal entries necessary to record the above transaction using appropriate
Date. Prepare adjusting eateries at December 31 concerning interest. Assume straight-line
Amortization of discounts.
Problem-4
15. Active Company sells automatic can openers under a 75 days warranty Based on past experience,
the company estimates that 8% of the units sold will become defective during The warranty period.
Management estimates that the average cost of replacing or repairing a defective Unit is Tk. 30. The
units sold and units defective that occurred during the last two months of 2015 are As follows:-
Month Units sold Units defective prior
November 64,000 1.400
December 60,000 1,000
Instructions:
Determine the estimated warranty liability at December 31, for the units sold in November and
December.
Prepare the journal entry to record the estimated liability for warranties and cost incurred in
Honoring 2.400 warranty claims (Assume actual cost Tk. 36,000).
Part-B
Problem-5
Meghla Corporation borrowed Tk. 50,000 on November, 1, 2014, by signing a Tk. 51,125 3 months,
were Interest bearing note.
Prepare : (i) Journal entries of Meghla Nov-1, 2014
(ii) Adjusting Journals at the Dec 31, 2014;
(iii) Adjusting Journal at the Feb 1 2015,
Problem-6
National Co. sells VCRs. The company also offers its customers a 2 years warranty contract. During
2012, Co. sold 15,000 warranty contracts at Tk. 99 each. The Co. spent Tk. 1,80,000 servicing
warranties during 2012 and it is Estimated that an additional Tk. 9,00,000 will be spent in the future
to service the warranties.
Prepare Journal entries for-
(a) The sale of contracts..
(b) The cost of servicing the warranties.
(c) The recognition of warranty revenue.
Problem-7
During the month of June, Plus Point had cash sales of Tk. 2,34,000 and credit sales of Tk. 1,37,000;
both of Which include the 6% sales tax that must be remitted to the tax authority by July 15, Sales
taxes on June sales Were lumped with the sales price and recorded as a credit to the Sales Revenue
account. During the month of July. Plus Point up new cash register that rings up sales and the 6%
sales tax separately. The Register totals for July were cash sales of Tk. 2,20,000 and credit sales of Tk.
1,10,000. The related sales tax is not Due to be paid until August 15.
(a) Prepare the journal entry to record June’s sales at June 30 (assuming the total sales for June are
recorded at June 30)
(b) Prepare the adjusting entry that should be recorded to fairly present the financial statements at
June 30.
(c) Prepare the journal entry to record the remittance of the sales taxes on July 12.
(d) Prepare the journal entry to record July’s sales at July 31.
Current liabilities and contingencies
Sl Transection Journal
1 Purchase good / equipment on account Purchase / equipment – Dr.
A/P – Cr.
2 Issued a note to A/P A/P – Dr.
Notes payable – Cr.
3 Accrued interest (adjustment) Interest expense – Dr.
Interest payable – Cr.
4 Paid notes payable Notes payable – Dr.
Interest payable – Dr.
Cash – Cr.
5 Warrenty cost (adjustment) Warrenty expenses - Dr.
Warranty payable – Cr.
6 Sales with sales tax Cash – Dr.
Sales – Cr.
Sales tax payable – Cr.
7 Zero interest bearing note Cash – Dr.
Discount on notes payable – Dr.
Notes payable – Cr.
8 Discount on notes payable (interest) Interest expenses – Dr.
Discount on notes payable – Cr.
9 dividend Dividend – Dr.
Dividend payable – Cr.
10. Fair Value Management
Part B
Problem-1
ABC company pays a dividend of Tk. 10 per share. Company's growth rate is zero per cent. If the cost
of equity is 12%, what will be the present value of the share?
Problem-2
Mr. Karim Mr. A currently pays a annual dividend of Tk. 20 which is expected to grow at 5%
indefinitely. Cost of common stock is 15%, calculate the value of common stock.
Problem-3
ABC company currently has an EPS of Tk. 40 and dividend payout ratio is 40%. An investor required a
14% on this kind of investment Growth rate is 8%. What is the value of ABC's share?
Problem-4
Apex Ltd. Currently pays a dividend of Tk. 5.00 per share on its equity share.
If the Company plans to increase its dividend at the rate of 10% year what will be the dividend per
share in 5 years?
If the Company’s dividend expected to be Tk. 8.50 per share at the end of five years at what annul
rate is the Dividend expected to grow?
Problem-5
In one year 100 shares of common stock will be worth a total of Tk. 14,000. During the year, the
holder of the shares Will received dividends of Tk. 1,000. Investments in this kind of stock required
rate of returns is 20% before taxes.
(a) What is the intrinsic value of 100 shares?
(b) Would you buy the shares if its current market price of Tk. 11,500?
Problem-6
BD Ltd. Declared a dividend of Tk. 5 per share. It is expected to grow at 20 percent for the next 2
years and at 10 Percent thereafter. The investor’s required rate of return is 12 percent. What is the
intrinsic value of the share?
Part C
Problem-7
Determine price of a share of Uro cola company from the information given below:
The current dividend is given as Tk. 2. growth rate of dividend for first 4 years is 6%. growth rate of
dividend for next 3 years is 10% at last, perpetual growth rate is 7%, discount rate is 16%.
Problem-8
You are evaluating the potential purchase of a small business currently generating $ 42,500 of after
tax cash flow (Do= 42,500). On the basis of a review of similar-risk investment opportunities. You
must earn an 18% rate of return on the proposed purchase. Because you are relatively uncertain
about future cash flow. You decide to estimate the firm's value using several possible assumptions
about the growth rate of cash flows.
(a) 0% growth rate from now to infinity (b) 7% constant growth rate from now to infinity.
(c) 12% growth rate for first 2 years, followed by a 7% constant growth rate from year 3 to infmity.
Problem 9
Lawrence industry’s most recent annual dividend was Tk 30 per share (D₀ = TK 30) and the firms
required return is 15%. Find the market value of lawrence’s share when:
a. Dividends are expected to grow at 10% annually for 4 years.followed by a 6% constant

growth rate from years 5 to infinity.
b. Dividends are expected to grow at 10% annually for 4 years.followed by an 8% constant
c. Dividends are expected to grow at 10% annually for 4 years. followed by a 10% constant
Problem 10
Silver computer is experiencing a period of rapid growth earning and dividends are expected to grow
at a rate of 10% during the next 2 years. At 8% in the third year and at a constant rate of 6% there
after.
Silver’s last dividends was TK 101 per share and the required rate of return on stock is 12 %.
Required
A Calculate the value of stock today.
B Calculate P1 and p 2.
Problem 11
XYZ Ltd. presently pays a dividend of Tk. 4.00 per share on its common stock. It is expected to grow
by 8 percent each year for next 4 years. The market price of the share is expected to be Tk. 60 at the
end of 4 years. Assuming investors required rate of return is 12%, at what price should the share of
XYZ Ltd. sell?
Stock valuation
Formula:
1. Zero growth rate p0 =

2. Constant growth rate & Na year p0 =
3. Multi stage growth rate & year : p0=

4. P1 & d1 are given : p0 P0 =
5. g= b x r
d1 = d0 (1+g)
D= E x DPR
DPR = 1 - b
Description:
i. p0 = current market price of share

ii. p1 = market price per share at the end
iii. D= dividend per share
iv. D1 = next year dividend per share
v. K = cost of capital
vi. g= growth rate
vii. E(EPS) = earnings per share
viii. b= retention ratio
ix. r = rate of returns
x. DPR= dividend payout ratio
Valuation of stock
1. p0 =
2. Pn =
3. p0 =
4. D1 =
5. Ke =
13. Capital Structure Theories
Problem 1
LPTON Trading company's earnings before interest and taxes (EBIT) Tk. 4,00,000. The equity
capitalization rate (Ke) is 12%, 16% interest is on a bond involving a total interest of Tk. 1,60,000. The
number of shares of the company is 10,000.
Required : (using NI approach)
a) Total Market value of share (s) b) Total Market value of debt (B)
c) Total Market value of firm (v) d) Overall capitalization rate (Ko)
e) Market price per share. (Po) f) Earnings per share (EPS)
g) Dividend per share (DPS) h) Percentage of financial leverage.
Problem 2
Sun Limited with operating earnings (EBIT) of Tk. 4,00,000 to evaluate a number of possible capital
structures given' below. Which of the capital structure will you recommend. According to net income
approach
Ca ital Structure Level of debt Cost of debt Cost Ofe uit
1 2,00,000 11% 13%
2 3,00,000 1 1% 14.50%
3 4,00,000 12% 15.50%
4 5.00.000 13% 17%
Problem 3
In Considering the most desirable capital structure of XY Ltd. The following debt and equity capital
(after tax) have been made at various investment plan. You are required to determine optimum
debt- equity mix for the company by calculating the composite cost of capital.
investment Ian % of debt Cost of debt % Cost Of equity %
A 0 0 12
B 10 5 12
c 20 5.2 12.5
D 30 6 13
E 40 6.5 14
F 50 7 15.0)
G 60 7.5 16
Problem 4
Beximco pharmacuticals Ltd has 68200 of common stock outstanding. Beximco employes Tk.
55,80,000 of Debt capital carrying 10% interest charge. The overall cost of capital is 12.50%. Its net
operating income (EBIT) Tk. 15,50,000 in the year-2004.
Required: (Using NOI Approach)
1. Total Market value of Beximco. Pharmacuticals (v) 2. Total Market value of share cpaital (s)
3. Total Market Price per share (Mkt. per share). 4. Earnings per share (EPS).
5. Equity capitalization rate (Ke). 6. Degree of financial leverage (DFL)
7. Percentage of financial leverage 8. Dividend per share (DPS).
9. Verify the validity of WACC.
Problem 5
A Ltd. And B Ltd. Are two different concerns and both of them have an annual operating income of
Tk. 1,20,000. Cost of equity (k.) of A is 10% has got no debt, while B has got a 5% debt of Tk.
6,00,000. Corporate Tax rate 50%. Following M-M approach you are required to find out:
1. Total market value of both the firm. 2. Total market value of share both the firm.
3. Cost of equity of both the firm, 4. WACC of both the firm,
Problem 6
The following information are given to you
Firm U Firm L
EBIT 250000 250000
10% Debt - 7,50,000
Keu 15% -
Corporate tax rate 40% 40%
Personal tax rate 10% 10%
Required
a) Value of unlevered firm (Vu); b) Gain from leverage;
c) Cost of equity of levered firm (Kel). d) Value of Levered firm (VL);
e) Cost of equity of unlevered firm;
Problem 7
The following is the data regarding two companies Sun and Moon belonging to the same risk class
Details SUN MOON
EBIT/NOI Tk. 3,00,000 Tk. 3,00,000
6% Debt Tk. 10,00,000
Cost of Equity 10% 15%
Requirement:
1. Value of the firms. 2. Overall cost of capital.
3. Assume that an investor owns 10% of SUN Company’s share. Using Arbitrage Process show that,
how can he obtain same return at a lower cost.
Problem 8
The two companies, U and L,belong to an equivalent risk class. There two firms are identifiable in every respect
that U company is Unlevered while company L has 10 percent debentures of Tk.40 lakh. The other relevant
information regarding their valuation and capitalization rates are as follows.
Details Firm U Firm L
Net operating income (EBIT) 6,50,000 650,000
Interest on debt 400000
Earning to equity holders (NI) 650,000 250,000
Equity capitalization rate 0.15 0.2
Market value of equity (S) 50,00,000 12,50,000
Market value of debt 40,00,000
Total value of the firm (S+B) 50,00,000 52,50,000
Implied overall capitalization rate (ko) 0.15 0.143
Debt - equity ratio (k) 0 1.33
1) An investor owns 20 percent equity share of company L. Show the arbitrage process and
the amount by which he could reduce his outlay through the use of leverage.
2) According to Modigliani and Miller, when will this arbitrage process come to an end?
Problem 9
ABC Ltd has the following capital structure.
Equity (Tk. 100 per share) Tk. 10,00,000
12% Debt Tk. 5,00,000
The company wishes to raise Tk. 5,00,000 for expansion program. The following alternatives are
available
i. 100% equity.
ii. 50% equity and 50% debt @ 12%
iii. 100% debt @ 12%.
The expected EBIT is Tk. 20,00,000 the tax rate is 40%. Calculation the EPS and which one would you
prefer. Calculate the indifference point between (i) and (ii).
Problem 10
The capital structure of PQS Company Ltd. Are as follows:
Common stock Tk. 40,00,000
10% debenture Tk. 20,00,000
The Co. needs additional financing of Tk. 20,00,000, this can be financed by the following
alternatives :
(A) Fully equity stock of Tk. 100 each.
(B) Fully 12% preferred stock.
(C) Fully 10% debenture.
If the company's expected EBIT is Tk. 10,00,000 and tax rate 50%.
Problem 11
The capital structure of IDLC is given below:
12% Debenture Taka 12,00,000
10% Preferred stock Taka 10,00,000
Common stock (Tk. 100 per) Taka 8,00,000
The company needs additional financing of Tk. 12,00,000. This can be financed in the following ways
(i) Fully by common stock of Tk. 100 each;
(ii) Fully by 12% debenture;
(iii) Fully by 13% preferred stock.
If the company’s expected EBIT is Tk. 8,00,000 and corporate tax rate is 25%.
Required:
(a) Which alternative method of financing should be selected and why?
(b) Calculate the indifference point of EBIT of alternative method (i) and method (ii).
Problem-12
MRS Co. Ltd. has present capital structure as follows
Equity share capital (10,000 shares) 10,00,000
10% Debt capital 5,00,000
The firm is thinking to raise capital of Tk. 5,00,000 for its expansion. It has two alternative financing
methods.
(i) Issue of 12% debenture.
(ii) Issue of 13% preference share capital of Tk. 2,00,000 and equity capital of Tk. 3,00,000.
Determine the indifference point of EBIT and EPS between these two financing methods. Tax rate is
30%
Problem 13
The following information are given to you
Firm L Firm U
EBIT 220000 220000
10% Debt 7,00,000 -
Keu - 22%
Corporate tax rate 35% 35%
Personal tax rate 22% 22%
Interest tax rate 22% 22%
Cost of financial distress of 4.5%
Required
b) Value of unlevered firm (Vu); b) Gain from leverage;
c) Cost of financial distress of d) Value of Levered firm (VL);
Capital Structure
a. Without Tax
Ebit 1,00,000 1. S =
Less Interest 10,000
90,000 2. B =
NI 0,10 3. V = S+B
Capitalization rate (ke) 9,00,000 4. K0 =
Market value of share (B) = 1,00,000
10,00,000 Or,
Market value of firm (v) = g+B
Overall capitalization rate (ke) K0 = Ke +( ) + kd ( )
b. with tax ( mm Approch: Here,

1. Vu = 1. Vu = Value of
unlevered firm
2. VL = vu + TD
2. VL = value of
3. koL = Keu + (keu -Kd) (1-Tr) levered Firm
4. Kel = Keu + (keu – Kd)(1-Tr) 3. T = Tax rate
5. Gain from leverage = VL + Vu 4. Tc = Corporate tax
6. Vu = rate
5. Ts = personal Tax
7. V1 = Vu + [ XD
Rate
8. Ip = =
13. Pricing Models
Problem-01
A firm's risk free rate is 7%. The rate of return on the market is 13% and a beta 0.65. What is the
expected retune based on the CAPM? If another stock has an expected return on 25%; what will it's
be beta?
Problem-02
From the following data you are required to calculate :-
(a) Beta for stock A and B.
(b) Required rate of return for each stock A and B.
Data:
Expected market return = 12%
Standard deviation of market return = 21%
Risk free return = 8%
Correlation coefficient between
Stock A and market = 0.8
Stock B and market = 0.6
Standard deviation for stock A = 25%
Standard deviation for stock B = 30%
Problem-03
Assume the CAPM with risk free rate lending but no risk free borrowing, The return on the market
portfolio is 10% and return on the zero beta portfolio is 16%. The market standard deviation is 30%.
Fill up the missing value from the following table :
Stock E (r) SD Beta Residual Variance
Ali Express 0.16 - - 0.0375
Bikroy.com 0.08 - - 0.0775
Problem-04
At present the risk free rate is 8% and the expected return on market is 14%. The average returns for
four stocks enlisted together with their expected Beta-
Stock Average Return Beta
А 16% 1.25
B 14.5% 0.85
C 16% 1.00
D 18% 1.50
On the basis of above expectation which stocks are overvalued and undervalued?
Problem-05
Expected return on two stocks for particular market return are as follows :-
Market return Stock A Stock B
7% 5% 9%
22% 35% 19%
(a) Calculate the beta of each stock. (b) Calculate expected return of each stock.
(c) If the risk-free rate is 7%. What is the SML?
(d) Calculate alpha of each stock.
Problem-06
Assume both portfolios A and B are well diversified, ER of A = 13.5% and ER of B = 14.8%. If the
Economy has only one factor and beta of A = 1.0 while beta of B = 1.2. What must be the risk-free
rate?
Problem-07
The following information is available for five efficient mutual funds:
Mutual funds A B C D E
SD %. 15 17 20 25 30
Required:
(1) Compute the slope of the CML.
(2) Compete the expected return for each portfolio.
(3)Rank the portfolios as per ascending order of expected return.
(4) Do any of the portfolios have the same expected return as the market? Why?
Problem-08
A stock has an expected return of 16.25 percent, A beta of 1.75 and the expected return on the
market is 11 percent. What must the risk free rate be?
Problem-09
Assume that a stock is priced in equilibrium. It's expected return next year is 10 percent and it's beta
is The risk free rate is 5.6 percent.
(i) Calculate the slope of SML
(ii) Calculate the expected return on the market.
Problem-10
From the following information find out the portfolio return and portfolio risk of the portfolio
consisting
Security A and Security B:
Security Investment (Tk.) E(Ri) SD
А 40.000 13.5% 12%
B 50.000 14.8% 8%
Correlation between Security A and B = 0.75
Problem-11
Suppose you are the money manager of a Tk. 4 million investment fund. The fund consists of 4
stocks with the following investments and betas:
Stock Investment (Tk.) Beta

A 4.00.000 1.50
B 6.00.000 0.50
C 10.00.000 1.25
D 20.00,000 0.75
If the market required rate of return is 14 percent and the risk-free rate is 6 percent, what is the
fund's required rate of return?
Problem-12
The following information is available:
Stock-X Stock-Y
Expected return 16% 17%
Standard deviation 8% 5%
Co-efficient of correlation is 0.50
Required:
(a) Co-variance between stock 'X' and 'Y
(b) Expected return and risk of portfolio in which 'X' and 'Y' have an equal weight.
Problem 13
Manager of BP Ltd gives you the following information:
Investment in equity share Initial price TK Dividend TK Year ended market price Tk Beta Risk
MI food Ltd 33 2 40 0.80
Padma oil Co. 85 3 95 0.60
S R steel Ltd 44 1 50 0.50
Govt. security (BD) 138 8 155 0.99
Risk free rate of return is 10%. You are required to calculate :
a. Expected rate of return on market portfolio.

b. Expected rate of return for each security.
Problem 14
Considering the following information for the stock of a company, calculate its beta:
Current market price per share TK 50
Expected dividend per share next year TK 4
Constant annual dividend growth rate 8%
Risk free rate of return 7%
Return on market portfolio 12%
S.L Probability S.L ছ /year
1 E(R)= (R1 x P1)+(R2 x P2) + (R3 x P3) 1 E(R)=
2 SD( 2
SD(
3 C.V= 3 CV=
4 Covariance (cov)= (RA-ERA) X RB – RRB) X P] 4 COVAB =
5 Correlation (rAB) = 5 COR(rab)=
6 Vairance
7 Portfolio এ : E(R)p =(RA X WA) + (ERB X

WB) + (ERC + wC) ……
8 Portfolio এ : A
2
x δA2)+(WB2 x δB2)
+ 2WAWBxCovAB
9 CAPM: ER= Rf + B (Rm – Rf)
10 CAPM: B= x rA
11 CML : Slope of CML -
12 CML : ER = Rf + (
14. Intangibles
Problem 1
On January 1, 2007 Islam Brothers purchased a 10-year sub-lease on warehouse for the 3,00,000.
Islam Brothers will also pay annual rent of Tk. 60,000. Islam Borthers immediately incurred cost of
Tk. 2,00,000 for Improvement of the warehouse, such as light, fixtures, replacement of a ceiling
heating system and loading Lock. The improvements have an estimated life of 12 years and no
residual value.
Prepare entries to record :
(a) The payment for the sublease on a warehouse.
(b) The rent payment for the five years.
(c)The payment for the improvements.
(d) Amortization of the leasehold for the first year.
(e) Amortization of the leasehold improvements for the first year.
Problem 2
The intangible assess section of Padma Company at December 31, 2018 is presented below:
Patent(Tk. 70 cost less Tk. 7.000 amortization) Taka 63000
Copyright (TK 4.000 cost less Tk. 19200 amortization) 28800
The aim was acquired in January 2018 and has a useful life of 20 years. The copyright was acquired in
January 2015 and also us a call its of 10 years. The following cash transactions may have affected
intangible assets during 2019.
January 2: Pad Tk 27.000 legal costs to successfully defend the patient against infringement by
another company.
January to June: Developed a new product, incurring Tk 140.000 in research and development costs.
A patent was Gathered for the product on July 1.Its useful life is equal to its legal life.
September 1: Paid TK 80.000 to an extremely large defensive lineman to appear in commercial
advertising the Company’s products. The commercials will air in September and
October
October 1: Acquired a copyright for Tk 1.20.000. The copyright has a useful life of 50 years.
Required:
1) Prepare the journal entries to record the transaction above.
2) Prepare the journal entries to record the 2019 amortization expense.
3) Prepare the intangible assets section of the balance sheet at December 31, 2019.
Problem 3
On July 31, 2014 Hasan Company paid Tk. 30,00,000 to acquire all of the common stock of Advanced
Incorporated which became a division of Sabbir. Advanced reported the following balance sheet at
the time of the acquisition :
Account titles Taka Account titles Taka
Current assets 8,00,000 Current liabilities 6,00.000
Non current assets 27,00,000 Long-term liabilities 5,00,000
Stockholders’ equity 24,00,000
Total assets 35.00,000 Total liabilities and stockholder’s equity 35,00,000
It was determined at the date of the purchase that the fair value of the identifiable net assets of
Advanced was Tk. 26.50,000. Over the next 6 months of operations, the newly purchased division
experienced operating losses, in Addition, it now appears that it will generate substantial losses for
the foreseeable future. At December 31, 2014,
Advanced reports the following balance sheet information :
Taka
Current assets 4,50,000
Non current assets (including goodwill recognized in purchase) 24,00,000
Current liabilities (7,00,000)
Long-term liabilities (5,00,000)
Net assets 16,50.000
It is determined that the fair value of the Advanced Division is Tk. 18.50,000. The recorded amount
for Advanced’s net assets (excluding goodwill) is the same as fair value, except for property, plant
and equipment, which has a fair valu Tk. 150.000 above the carrying value.
Instructions:
(a) Compute the amount of goodwill recognized, if any, on July 31, 2014.
(b) Determine the impairment loss, if any, to be recorded on December 31, 2014.
(c) Assume that fait value of the Advanced Division is Tk. 16,00.000 instead of Tk. 18,50.000.
Determine the Impairment loss, if any, to be recorded on December 31, 2014.
(d) Prepare the journal entry to record the impairment loss, if any, and indicate where the loss
would be reported in The income statement
Problem 4
During 2014, Lima corporation spent TK 1,70,000 in research and development costs. As a result, a
new product called the new age piano was patened at additional leal and other cost of Tk 18,000.
The patent was obtained on octOctober2014 and had legal life of 17 years and a useful life of 10
years.
Instruction:
a. Prepare all journal entries require in 2014 and 2015 as a result of the transection above.
b. On June 1m2016 Lima spent Tk 9,480 to successfully prosecute a patent infringement .As a
result the estimate of useful life was extended to 12 years from June 1,2016. Prepare all
journal entries required in 2016 and 2017.
c. In 2018, Lima determined that a competition’s product would make the new age piano
obsolete and the patent worthless by December 31, 2020. Prepare all journal entries
required in 2019 and 2020.
Valuation of Goodwill
Problem 1 [NU. BBA (Hons) 2013(Acc. Theory)]
The following is the balance sheet of Navid Ltd, as at 30-6-2008
Assets
Land and buildings Tk.1.70,000
Plant and machinery Tk.1,60.000
Vehicles Tk.70,000
Goodwill Tk.30,000
Current assets Tk.1,40.000
Liabilities and shareholders equity :
Paid up capital : 1,500 equity shares of Tk. 200 each Tk.3,00.000
General reserve Tk.50.000
Retained earnings Tk.20.000
Current liabilities Tk.2,00.000
On 30-6-2008 the assets were revalued as follow :
Land and buildings Tk. 2,00,000. plant and machinery Tk. 1,50,000 and vehicles Tk. 60.000.
The company eamed profits after depreciation and taxation as follows:
2006-Tk 60,000; 2007-Tk. 70,000 and 2008-Tk, 80.000
The valuation of goodwill is to be based on two years purchase of super profit. It is considered that
10% is a reasonable return on net tangible assets.
Find out the value of goodwill of the company. Make reasonable assumptions where necessary.
Problem 2 [NU. BBA (Hons)

2016/2008]
The following is the balance sheet of Md. Raihan on July 31, 2015 –
Assets Taka Liabilities Taka
Land & Building 36,000 Capital 1,64,000
Machinery 54,000 General Reserve 40,000
Investment 30,000 Accounts Payable 38,040
Stock 26,850
Cash 75,990
Accounts Receivable 19,200
2,42,040 2,42,040
Net profit for the year ended were as follows :-
July 31, 2013 Tk.32,280
2014 36,870
2015 43,350
The above amounts include the income from investments Tk. 1,800 each year. You are required to
calculate the value of Goodwill at 2 years purchase of 3 years average super profit. The standard rate
of
Return on capital employed in such business is 10%. Assume that each year’s profit is immediately
Withdrawn in full by Md. Raihan.
Problem 3 [NU. BBA (Hons) 2016(Question no
10)]
The following is the Balance Sheet of ABC Ltd. As on 31st December, 2016 :-
Balance Sheet
Liabilities Tk. Assets Tk.
25,000 8% pref. share of 10 each fully paid 2,50,000 Goodwill 200000
50,000 ordinary shares of Tk. 10 each fully paid 5,00,000 Land and premises at cost 100000
General reserve 4,00,000 Machinery at cost 700000
Reserve for Income tax 1,00,000 Inventory 300000
Sundry creditors 1,00,000 Investment (Idle cash) 100000
Profit and Loss A/c : Cash in hand 150000
Balance of last year 10,000 Preliminary expenses 10000
Profit for current year 3,00,000 3,10,000 Sundry debtors 100000
16,60,000 16,60,000
The market value of land and premises is Tk. 2,50,000 and that of machinery is Tk. 6,00,000. Market
Value of inventory and investment is Tk. 4,00,000 and Tk. 2,00,000 respectively. Sundry debtors are
Bad to the extent of 5%. Income received from investment is Tk. 10,000. Profits of the company for
The last three years have shown in an increase of Tk. 50,000 annually.
On the basis of above information you are asked to find out the value of goodwill on the basis of
Super profit method. You may assume that—
1)The profit of last three years were before tax;
2)Tax rate is 40%;
(iii) Depreciation on land and premises @ 2% and on machinery @ 10%;
(iv) Normal rate of return is around 18%;
No. of year of purchase 2. (if necessary).

10)]
The information given below relates to Rupsha Company Ltd. Total assets Tk. 60,00,000 which
include the following:
Tk.
Goodwill 5,00,000
Preliminary expenses 2,00,000
Investment (total) 12,00,000
Cash 1,00,000
Long term loan 5,00,000
Debenture 10,00,000
Reserve 2,50,000
Current liabilities 11,00.000
Market value of investment amount to Tk. 15,00,000 and that investment include Tk. 2,50,000
representing idle fund.
The company's Net profit during the last three years were:
2013- Tk. 3,50,000, 2012-Tk. 2,75,000,2011-Tk. 1,00,000.
Normal rate of return is 15%.
Find out the value of goodwill of the company. Make reasonable assumptions where necessary.
14)]
Following is the Balance Sheet of Y Ltd. as on 31 December, 2017:
Balance Sheet
Liabilities Taka Assets Taka
Share capital 3,00,000 Goodwill 1,00,000
General Reserve 4,50.000 Plant 2,70,000
Retained earning 65,000 Building 2,50.000
Bank overdraft 85,000 Inventory 2,80.000
Accounts Payable 3,00,000 Accounts Receivable 3.00,000
12,00,00
12.00,000 0
Profits earned by the company before provision for taxation are as follows:
2013 : Tk. 3,05,000
2014 : Tk. 2.10,000
2015 : Tk. 3.15.000
2016: Tk. 3,00,000
2017: Tk. 3,25,000
Provision for taxation may be made at 40%. Rate of return on capital employed in similar business
may be taken at 12%.
Required: Ascertain the value of goodwill of the business on Capitalization method.
Problem 6
Ascertain the value of goodwill of RA ltd.
Balance sheet
June 30,2018
Paid up capital :
2,500 shares of TK 100 each 2,50,000 Goodwill at cost 1,00,000
General reserve 2,00,000 Land and buildings 2,00,000
Profit and loss A/C 3,15,000 Plant 2,70,000
Bank overdraft 1,30,000 Debtors 2,80,000
Creditors 1,70,000 Closing stock 2,50,000
Provision for taxation 85,000 PreliminaryExpenses 50,000
11,50,000 11,50,000
Profits earned by the company before provisions for taxation for last five years are as follows:
Years TAKA
2013 2,10,000
2014 3,05,000
2015 3,00,000
2016 3,15,000
2017 3,20,000
Provision for taxation may be made at 40%. Rate of return on capital employed in similar business
may be taken at 15%. You are required to ascertain the value of goodwill of the business
capitalization method.
Problem 7
The following information relates to sagar corporation:
Goodwill TK. 1,12,000; preliminary expenses 40,000; Investments Tk 3,00,000. Cash Tk 40,000. Other
fixed assets Tk 9,00,000.
Market value of investment Tk 3,60,000 of which TK 60,000 represents an idle fund. The Co’s short
term liabilities amount Tk 2,40,000. Long term loans amount Tk 1,20,000 and debentures Tk
2,00,000. Reserve fund Tk 50,000. Net profits : 2010 = TK 1,00,000; 2011= TK 30,000 and 2012= TK
70,000.
Normal profit expectation of similer Co. is 15%
Required:
Calculate the goodwill of the Co.
Problem 8
Ascertain the value of Goodwill of Dallas Co. Ltd. from the following informatin supplied to you:
Balance Sheet
June 30, 2017
Taka Taka
Paid up Capital :
2.500 shares of Tk. 100 each 2,50,000 Goodwill at cost 25,000
Bank overdraft 58,350 Land and Building at cost 1,10,000
S. Creditors 90,500 Plant and Machi. at cost 1,00,000
Provision for Taxation 19,500 Stock in Trade 1,50,000
P/L Appropriation Account 56.650 Book Debts less Provision 20.000
4,75,000 4,75,000
The company commenced operation in 2013 with a Paid up Capital of Tk. 2,50,000. Profit earned
have been as follows:
Year end June 30 : Taka
2013 41,000
2014 44,000
2015 51,500
2016 58,000
2017 65,000
Income tax is payable @ 50% on the profits. Dividend have been distributed from the profits of the
first two years @ 10% and from those of the next two years @ 15% on the Paid up Capital. The
market price of the share is ruling at the end of year ended June 30, 2017 at Tk. 125.
Valuation of Share
10)]
Given below is the balance sheet of X Ltd. As on 31 st December, 2016:
Balance sheet
Liability Taka Assets Taka
1,000 6% preference shares of Tk. 100 each 1,00,000 Goodwill 10000
Fully paid up Preliminary expenses 10000
50,000 ordinary shares of Tk. 10 each fully 5,00,000 Buildings 60000
Paid up
Reserves 50,000 Machinery 3,50,000
Profit and loss a/c 20,000 Stock 1,20,000
Sundry creditors 40,000 Debtors 1,60,000
Other liabilities 10.000 Cash at bank 10,000
Goodwill is valued at Tk. 30,000 and Building at Tk. 50,000. Machinery is to be depreciated by Tk.
25,000. Stock is worth Tk. 1,40,000. Debtors are expected to realize 90% of book value.
Find out the value of per ordinary share.
Problem 10
Given below is the balance sheet of Mamun Ltd. as at 31st December 2013:
Mamun Ltd.
Balance Sheet
December 31, 2013
Share capital: 20,000

share @ Tk. 10 Each 2,00,000 Plant & Machinery 1,65,000
General Reserve 90,000 Land & Building 1,55,000

Taxation provision 50,000 Trade marks 10,000
Employees savings A/c 25000 Stock-in-trade 24,000
S/creditors 49,000 S/Debtors 44,000
P/L App. Account 16,000 Cash at Bank 26,000
Preliminary exp. 6,000
4.30.000 4.30.000
Profit before tax and rate of dividend for last three years were :-
Year Profit before tax. (Taka) Rate of Dividend
2011 1,00,000 15%
2012 1,50,000 20%
2013 2,00,000 25%
Market yield of similar types of share is 16%.
Compute the value of share:
i. If majority holdings are to be sold and
ii. Minority holdings are to be sold.
Problem 11 [NU. BBA (Hons) 2013(Question no 10)]
The following is the Balance Sheet of TIMU-SETU Ltd. as 30th June, 2012-
Balance Sheet
June 30, 2012
Share Capital @ Tk. 10 cach) 22.00,000 Plant (15,00,000) 1060000
General Reserve 1.00,000 Buildings (13,00,000) 1120000
Profit and loss account 530,000 Debtors (9,00,000) 950000
Bank overdraft 800,000 Stock in trade (17,00,000) 1450000
Creditors (4.25.000) 450000
Tax reserve 500000
45.80.000 45.80.000
The values placed in brackets have been available upon revaluation. You are given
below the profits of the company for the last five years:
Year Net Profit (Taka)
2008 3,00,000
2009 3,50,000
2010 4,25,000
2011 4,75,000
2012 5,50,000
On the basis of the above information you are asked to find out the value of a share on
the basis of Intrinsic value method. You may assume that-
(i)The profit of last five years were before tax;
(ii) Tax rate is 40%:
(iii) Normal rate of return 10%. Valuation of Shares

10)]
A company has authorized and paid up capital Tk. 20,00,000, Tk. 100 per share. The total assets of
the company at its price were Tk. 90,00,000 and the outside liabilities were Tk. 32,00,000. The
company during the last 5 year profit tk. 780000; 915000; 575000; 750000; 6,25,000. The normal
rate of return expected in future is 12%. The company during the last 5 years declared dividend at
the rates 15%, 17%, 18%, 20% and 20%. Find out the fair value of share taking into consideration the
value of goodwill at 3 years purchase of average super profit for last 5 years and intrinsic value per
share,
Problem 13
Total assets: 45,00,000 TK
Total liabilities: 16,00,000 TK
Profits : 2011 = TK 5,80,000 2012 = TK 6,15,000
2013 = TK 5,75,000 2014 = TK 6,25,000
2015 = TK 7,00,000
The normal rate of return expected in future is 12%
Dividend rates: 2011 = 15% 2012 = 17%
2013 = 18% 2014 = 20%
2015 = 20%
Find out the fair value of share. ( ignore taxation and assume the value of the goodwill at 3 years
purchase of last 5 years average super profit.)
Problem 14
Balance sheet of Urmi Ltd. as at December 31, 2019 is as follows:
Balance sheet
Ordinary shares of Tk. 10 each 3,00,000 Goodwill 20,000
Debentures 1,00,000 Machinery 1,30,000
Reserve 30,000 Buildings 70,000
Retained earnings 40,000 Furniture 10,000
Provident Fund 20,000 Stock 1,75,000
Accounts payable 50,000 Accounts receivable 1,33,000
Outstanding expenses 10,000 Cash 4,000
Prepaid expense 3,000
Preliminary expense 5,000
5,50.000 5.50,000
Goodwill is worth Tk. 70,000; Machinery is valued at Tk, 1,70,000; Market value of buildings Tk.
90,000;
Stock is worth Tk. 1,85,000; Book debts are bad to the extent of about 5% of the amount shown in
the balance sheet.. Outstanding expenses do not include disputed bonus claim of Tk. 8,000 of which
Tk. 5,000 is likely to be paid. Dividends paid for last three years were 12%, 11% and 16%. where as
the normal expectation is 10%.
Find out the fair value of each ordinary share
Problem 15 [NU. M.Com 2003]

Following is the Balance Sheet of Bangladesh Company Ltd, as at 30-6-2010
Paid up Capital 2,00,000 Buildings 1,70,000
1,000 Ordinary shares of Tk 200 each Machinery 1,65,000
Preference shares 1,00,000
5.000 Preference shares of Tk. 20, each Motor Car 75,000
reserve 60,000 Goodwill 30,000
Profit and Loss 20,000 Current Assets 1,40,000
Appropriation account
Current Liabilities 2,00,000
On 30th June 2005 the assets were revealed as follows:
Buildings 2,00,000. Machinery 1,50,000 and Motor Car Tk. 60,000.
The company earned profits after depreciation and taxation as follows: 2008-Tk 60,000, 2009-Tk.
70,000
2010-Tk. 80,000.
The valuation of goodwill is to be based on two year's purchase of super profit. It is considered that
10% is a reasonable return on net tangible assets.
Compute the value of the goodwill of the Company and also ascertain the value of each Ordinary
share an each Preference share under the intrinsic value of method.
GOODWILL
Super Profit Method এ Good will ম :
Working 1: Capital employed
Account titles TK
Market value/Fair value/Present value of Assets 10,000,000
less: Current liabilities 2,00,000
Capital Employed 8,00,000

 Fictitious Assets ( ক/ ) Assets
 Goodwill at cost/purchased ক Assets ক
 Investment/Non-trading/Idle fund/Surplus fund
Working 2: Calculation of the current year’s profit:
Current year’s profit before tax 2,00,000

Less: Adjustment: Bad debt, Depreciation, Interest on investment etc. (60,000)
Add: interest on long term loan etc. 10,000
1,50,000
Tax (40% or given%) 60,000
9,00,000
Profit After tax ক ছক ক ।
Investment /Loan এ ক ১০%-১৫% ক
Depreciation এ ক Building ২%, Furniture ১০%
Working 3: Average Capital employed:
Capital employed (W-1) 800,000

Less: ½ of current year profit (90000/2) 45,000
755,000
Current year profit ক /ম কম ক current profit

।
Working 4: Average maintainable profit:

Average Profit = 200,000
= (50,000)
Adjustment: (Working 2 এ ম (60,000-10,000)
150,000
Working 5: Normal Profit:

Normal Profit =Average capital employed x Normal Rate of Return
= 750,000 x 10% =75,500
NRR ক NRR = (D/P) x 100 ক / 10%
Working 6: Super Profit = Average maintainable profit – Normal Profit
= 150,000-75,500
=74,500
Req: Goodwill = Super Profit x No. of year of purchase
= 74,500 x 2
= 149,000
Purcahse Year ক 2-4 ছ ।

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Department: Accounting (Final Year)

2019,২০১৮,২০১৭,২০১৬,২০১৫ ২০১৪ nu question ।

***** ক 10, 12, 13, 15 ক ।

*** ROE = (EAT/Equity Capital)x100

a. Dividends are expected to grow at 10% annually for 4 years.followed by a 6% constant

1. Zero growth rate p0 =

3. Multi stage growth rate & year : p0=

i. p0 = current market price of share

b. with tax ( mm Approch: Here,

Stock Investment (Tk.) Beta

Manager of BP Ltd gives you the following information:

Risk free rate of return is 10%. You are required to calculate :

a. Expected rate of return on market portfolio.

1 E(R)= (R1 x P1)+(R2 x P2) + (R3 x P3) 1 E(R)=

4 Covariance (cov)= (RA-ERA) X RB – RRB) X P] 4 COVAB =

5 Correlation (rAB) = 5 COR(rab)=

7 Portfolio এ : E(R)p =(RA X WA) + (ERB X

9 CAPM: ER= Rf + B (Rm – Rf)

11 CML : Slope of CML -

Problem 2 [NU. BBA (Hons)

Problem 4 [NU. BBA (Hons) 2014(Question no

Share capital: 20,000

General Reserve 90,000 Land & Building 1,55,000

Problem 12 [NU. BBA (Hons) 2015(Question no

Problem 15 [NU. M.Com 2003]

Capital Employed 8,00,000

Working 2: Calculation of the current year’s profit:

Current year’s profit before tax 2,00,000

Working 3: Average Capital employed:

Capital employed (W-1) 800,000

Current year profit ক /ম কম ক current profit

Working 4: Average maintainable profit:

Working 5: Normal Profit:

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