REQUIREMENT 1:
ABC COMPANY
STATEMENT SHOWING RETURN ON ASSETS CALCULATION (All Figures in Thousand of Rupees)
Net Income / Total Assets X 100 = 500 / 8,000 X 100
Return on Assets = 6.25 %
ABC COMPANY
STATEMENT SHOWING RETURN ON EQUITY CALCULATION (All Figures in Thousand of Rupees)
Net Income / Shareholder’s Equity X 100 = Net Income / (Share Capital + Retained Earnings) X 100
= 500 / (1,000 + 90) X 100
Return on Equity = 45.87%
ABC COMPANY
STATEMENT SHOWING EARNING PER SHARE CALCULATION
(Net Income – Dividend on Preferred Stock)/ Outstanding Shares = 500,000 / (100,000)
Earnings per Share = Rs. 5 / Share
REQUIREMENT 2:
ABC COMPANY
STATEMENT SHOWING VALUE OF BOND A CALCULATION
C* [1- {1/ (1+i) n}] / (i) + M / (1+i)n = 75* [1- {1/ (1+0.05) 40}] / (0.05) + 1,000 / (1+0.05)40
= 75* [1- {1/ (7.0399) }] / (0.05) + 1,000 / (7.0399)
= 75* [1- {0.1420 }] / (0.05) + 142.046
= 75* [ 0.8579 ] / (0.05) + 142.046
= 75* 17.159 + 142.046
= 1,286.93 + 142.046
Value of Bond A = Rs. 1,428.977
REQUIREMENT 3:
ABC COMPANY
STATEMENT SHOWING VALUE OF BOND B CALCULATION
C* [1- {1/ (1+i) n}] / (i) + M / (1+i)n = 27.5* [1- {1/ (1+0.04) 40}] / (0.04) + 1,000 / (1+0.04)40
= 27.5* [1- {1/ (4.8010) }] / (0.04) + 1,000 / (4.8010)
= 27.5* [1- {0.2083 }] / (0.04) + 208.29
= 27.5* [ 0.7917 ] / (0.04) + 208.29
= 27.5* 19.7928 + 208.29
= 544.30 + 208.29
Value of Bond B = Rs. 752.59
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