Corporate Finance

Question 1: Compute re-order level, minimum level, maximum level and average stock level for component A and B of company XYZ Ltd.

Normal usage- 80 units per week

Minimum usage- 40 units per week

Maximum usage- 120 per week

Re-order period- Component A: 3 to 8 weeks; Component B: 2 to 6 weeks

Re-order quantity- Component A: 500 units; Component B: 600 units

Question 2: Sonu purchased shares of a company at Rs 180, which is expected to pay dividends of Rs. 5, Rs. 7 and Rs. 9 in years 1, 2 and 3 respectively. He is expecting to sell the shares at a price of Rs. 220 at the end of three years. Calculate:

a) growth rate in dividends

b) current dividend yield

c) required rate of return