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Fall 2011

Master of Business Administration - MBA Semester 2 MB0045 – Financial Management - 4 Credits
(Book ID: B1134)

Assignment Set- 1 (60 Marks)

Note: Each question carries 10 marks. Answer all the questions.
Q.1 Q.2 Q.3 What are the 4 finance decisions taken by a finance manager. What are the factors that affect the financial plan of a company? Show the relationship between required rate of return and coupon rate on the value

of a bond. Q.4 Q.5 Year 0 1 2 3 4 5 Discuss the implication of financial leverage for a firm. The cash flows associated with a project are given below: Cash flow (100,000) 25000 40000 50000 40000 30000

Calculate the a) payback period. b) Benefit cost ratio for 10% cost of capital Q6. A company’s earnings and dividends are growing at the rate of 18% pa. The growth rate is expected to continue for 4 years. After 4 years, from year 5 onwards, the growth rate will be 6% forever. If the dividend per share last year was Rs. 2 and the investors required rate of return is 10% pa, what is the intrinsic price per share or the worth of one share.

The project will increase revenues of the firm by Rs. Earnings per share Rs.3 Q. 48 million ad the net working capital will be liquidated at par.200 million. 50%. 250 million per year.4 Q. If the cost of capital is 10% what is the net present value of the project. What is the implication of operating leverage for a firm.2 (60 Marks) Note: Each question carries 10 Marks. Q.50 million on net working capital. which consists of Rs. What do you understand by operating cycle.MBA Semester 2 MB0045 – Financial Management . Given the following information. Answer all the questions. The increase in costs will be Rs.1 Q. The tax rate is 30%. The life of the project is expected to be 5 years.5 Discuss the objective of profit maximization vs wealth maximization.100 million per year. the fixed assets will fetch a net salvage value of Rs.2 Q. 150 million in plant a machinery and Rs. At the end of 5 years.6 model. what will be the price per share using the Walter . The depreciation rate applicable will be 25% as per written down value method. or 60%. Explain the Net operating approach to capital structure. Q. A company is considering a capital project with the following information: The cost of the project is Rs. The entire outlay will be incurred in the beginning.4 Credits (Book ID: B1134) Assignment Set. 40 Rate of return on investments 18% Rate of return required by shareholders 12% Payout ratio being 40%.[Type text] [Type text] Fall 2011 Master of Business Administration .

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