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MBA II-Semester Supplementary Examinations, January 2009

Time: 3 Hours Max. Marks: 60

Answer any FIVE questions.

All questions carry equal marks

1. “The ultimate goal of financial management is to increase the market value of
the firm”. Discuss.

2. Following are the details of a proposed project:
Initial outlay Rs. 80,000
Initial working capitalRs. 20,000
Cash flow before depreciation:
Year 1 2 3 4

Rs 35,000 35,000 30,000 30,000
Salvage value Rs. 20,000

Tax rate assumed to be 50%.
The project is depreciated on SLM. If the required rate of return is 10%.

Is the project acceptable order the NPV method?
3. What is weighted average cost of capital? Discuss the steps in computation of
weighted average cost of capital.

4. What do you understand by indifference point of EBIT? Explain with the help
of EBIT-EPT analysis.
ww. w

5. What is an informational content of dividend payment? How does it affect the
value of the share?

6. What do you understand by working capital? Discuss the various sources of
working capital funds.

It has Rs.studentyogi.studentyogi. with no difference in payment habit between old and new customers. Write short notes on: co (a) Finance Function (b) Profitability index (c) Acid test ratio (d) Operating leverage gi. After the change. Kakinada Chemicals presently gives credit terms of net 30 days. ww www.www. To stimulate . If it accepts these terms.studentyogi. ************ tyo en st ud w. 100 of sales and the company required rate of return on investment in receivables is 20% should the company extends its credit period? 8.studentyogi. 80 for every m Rs. the average collection period is expected to be 75 days. 90 million in sales and its average collection period is 45 7. Variable costs www. sales are expected to increase by www. the company may give terms of net 60 days.