Best of luck ltd., a profit-making company, has a paid-up capital of inr. 100 lakhs consisting of 10 lakhs ordinary shares of inr.10 each. currently, it is earning an annual pre-tax profit of inr. 60 lakhs. the company’s shares are listed and are quoted in the range of inr.50 to 80. the management wants to diversify production and has approved a project which will cost inr. 50 lakhs and which is expected to yield a pre-tax income of inr. 40 lakhs per annum. to raise this additional capital, the following options are under consideration of the management: (a) to issue equity share capital for the entire additional amount. it is expected that the new shares (face value of inr. 10) can be sold at a premium of inr. 15. (b) to issue 16% non-convertible debentures of inr. 100 each for the entire amount. (c) to issue equity capital for inr. 25 lakhs (face value of inr. 10) and 16% non-convertible debentures for the balance amount. in this case, the company can issue shares at a premium of inr. 40 each. you are required to advise the management as to how the additional capital can be raised, keeping in mind that the management wants to maximize the earnings per share to maintain its goodwill. the company is paying income tax at 50%.

Northern lights electronics just completed plans to distribute its new tablet. the product has several unique features that differentiate it from competitor products. the marketing team plans to begin a roll-out with to only one traditional retailer for the first two months. this strategy will give consumers the perception of the product’s stand-out personality and increase demand. marketing will proceed with for the next four months, where it plans to distribute to three other retailers, as well. for the last six months of the year, it will initiate distribution agreements with discount retailers and online retailers, and any other electronics store that wants to carry it. the marketing team is confident that the tablet will cycle through the first three stages of its product life cycle quickly. as the tablet reaches maturity during the second half of its first year in the market, it is good strategy to proceed with as described above. intensive distribution; selective distribution; exclusive distribution exclusive distribution; selective distribution; intensive distribution tertiary level distribution; secondary level distribution; mono-level distribution mono-level distribution; secondary level distribution; tertiary level distribution