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    © All Rights Reserved
    Download as PDF or read online from Scribd
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    5 views7 pages

    Fundamentals of Financial Management

    Uploaded by

    Sourabh Singh
    Previous years paper

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    of 7
    Your Roll No. .s..osevereseeee : : 7867 HC “3 $2417505 : Fundamentals of Financial Management : DSE for B.Com. ‘ ) Semester av t | Duration : 3 hours i { Maximum Marks 2 75 Write your Roll No. on the top immediately ny on receipt of this question paper.) | : (ger mosesrar & Prent Ot asae Fat at Rafer BT anrar organs Feaferet ) i { | Nore: Answers may be written either in English or in Hindi; : but the same medium should be uséd throughout i the paper. e wih «gar ayaa a aeat otintt or Rett Reet Ge NT F apr aor wet sat BT TAT we a ear aleg | Attempt all questions. All questions carry equal marks. Use of Simple calculator is allowed. Time-value tables will be provided. ari wor ater 1 att eat & oe TT FI ve of shareholders’ L What do you understand by the objecti aah oath maximization? Why is it considered superior to jective of profit maximization? P.T.O. Fe em & Ret & aM a ealioe & ater & ae at te : 15] : (@) What are the mai ‘pire (b) The m ae a in techniques of capital pudgetine” anagem, TS TEAS waT-B om of a company has two alterna Proposals u; nder Consideration, Project A requis? Capital Rs 18, nd . Rs 12,00,000 and project B rea" for five — a estimated to generate cash " Project B Rs. 5.89 ect A Rs. 4,00,000 per ioe is | -000 per year. The cost of caf! hich of the two projects shou! is of: 10%. Determine w Selecteg On the ba, : s 2 i. a a y Clad. has a machine which has been 10 operation Say : ‘ah Its remaining useful life is 8 years i M oo i ® Its current market value is Rs- 2,00 Om, Pany is ideri 1 to considering a propos4 Rodel g 2 P (i) net present value method, and (ii) profitability index method. In case of conflict which criteria should be followed and why? ‘ art & yder 3 we fan ae & fae tt Pat weaa &: uftiicrar A & fre 1,200,000 Fo agit ufterg af sragernar & aire aftatora B & fer 18,00,000 Bo at weet $1 ae & sia aa S fem das WHE BAT AF at ara F1 se afeatsraT A F 400,000 FO BAY anf afte aftatorar B & 5,80,000 Bo wie et at Barra 10% & 1 reat ee ea at wear 3 Pe gar ae _ () Praer acter er fafer aie (i) Trea Gass gr? 2 Bt Raft aX Rea Row at ATT Rat? afeg ait 8 (srr, ' Or ( ) jor 3 no salvage 000. The purchase # new Ad chine: The of machine to replace the existing ™ evant nt : . ., = Yy ‘formation is given below: pro. 3 New Machine Existing Machine Cost-of machine Rs. 3,30,000 Rs. 10,00,000 Esti i imated life 11 years 8 yeas Salvage value nil 40 om i Rs. 40, Annual out | cn 30000 units 75000 units Selling price Per unit Rs.15 Rs.15 ie 2 Annual Operating hours 3000 ° : 7 Material cost Per unit Rs. 4 Rs. 4 ; : Ss. Labour cost Per hour Rs. 40 a) Indirect cash ¢ . ost per annum Rs.50099 Rs.6500? The com 7 Pany follows the Straight-line method Preciati . ‘ation. The corporate tax rate is 30%. ABC Lt@- oe not . : ot make any investment if it y; i nt if it yields less than 12%- Ad ABC Lid. whether the existing machine should be rep! or Not. Ignore Capital gain tax. ABC : . Coe ae TMs ws a ae 788 geen Pre tear AAI wT 200,009 Go Ba * There are two companies * Identical in all respects exceP ager atta ae ait ait at arte 3,30,000 _ 10,00,000 SPIT ay nat gag Prearer yet De 40,000 ates soret 30000 az «75000 afr fama aaa aft ae 15 Fo 15 Go alte afer de 3000 3000 aah ama ofa are = 4 Fo _ 4 Bo. “eT apa we det 40 Go 70 Go Wer tes art wR aT 50000 Go 65000 Bo at agererer at at a Par a gee eat B1 SH | BR Bt Bx 30% a1 apc fafies ang Pree ar et a Bae iy fa gt ager a wt sheer eT TA ‘L Ltd’ and ! {in terms of their capital Structure. Following information is available: _ *U Ltd ‘which are: LLd. U Ld EBIT (Rs,) 100,000 500,000 12% debentures (R.) 500,000 7 Equity capitalization rate 20% 16" MM “lculate the values of two firms and illustrate a Ld *PProach how an investor holding 10% shares On Will be benefitted by switching over his investment OT" % © U Led. p.T.0. 5 hae Listes ait UfaPes of anfet F ot a ge a war 8 dae ort et der Ret B1 PRR We waar &: Lfatits — u fates EBIT (60) 100,000 500,000 12% FEAF (Go) 500,000 aa Sa wor ax 20% 16% 2 Rr ar Romer AE ate Mac oars at AT | Se SRP Bon rar fits 10% ae St Lfahits & arr Rae ufafies Fa ott aT oT Se | , ; Or (ara) The capital Structure of XYZ Lid. is as under: -9%, Debentures (Rs, 100) Rs. 2,750 | Rs. 2,25 “Equity shares (face value Rs. 10 per Rs. 5,001 share) 11% Preference shares (Rs, 100) Additional information: Debe: ° ntures are redeemable at par after 10 yea’ w . / ve 20% floatation cost. The market prio® " debenture is Rs. 105. @ Pr ' aa shates are redeemable at par - ars wats and have 30% floatation cost. The ™™ Price per pref, ser “rence share is Rs.106. | 6 “afaRer qari ‘Rea ar 10 aa ae TT Xe (ii) Equity share has Rs. 4 floatation cost and market price per share of Rs. 24. The next year expected dividend is Rs. 2 per share with annual growth of 5%. The firm has a practice of paying all earnings ~ in the form of dividends. (iii) Corporate income tax rate is 35%. Calculate weighted average cost of capital using (i) book value weights (ii) market value weights. 7 XYZ Pas Bt Seltra AeA HT THT & 90% fearat (100 Fe ATA) 11% safer GAR (100 0 Te) : (10 "So ae wT ee aT aif I) ag after Pear set air BAR TA HT 2,75,000 0 2,75,000 Go 50,000 “ak saatqaa arid 20% &1 105 Go 31 () sits seach ar wet 10 Renae ee a 98 Sat aM WET 106 FO Fl 6 eet dec ah woe ae 400 FHT ATT er 24 Go Bara aE HART as af 2 v0 HAE wat at ant ae eT fs wer ward 21 TH ore ax aN ae 35% BI 7 at ae wre % art sf a aR et ft safes staat aera a (i) gee AEE AT, (ii) aR 7, ar wT aes oer ATT 15 4. (@) Explain Gordon’s dividend model, What are its shortcomings? . SAT Hist St IE afr | saat afd A ; 1 T (b) - earning per share of a company is Rs. 20. ae a value of the Share is Rs, 100, The rate of ret” 7 Company is 25% and capitalization rate of ** Class is 12.5%, If Walter’s model is used: ® Win Should be the optimum payout ratio? 7 should be the market price per shar? "| 7 optimum payout Tatio? "| Gii)If company has a DIP ratio of 25%, what would | the price per share? Ue art =e wit $e oer 20 oF are ot Mee BO fe aoe at ax 25% ‘a srahr WHT 12.5% 8) gfe amex Hit wo ear Fert a 6B ety eT aR ata are GAT SEH @ || DP sama 25% ® a at 7867 Pe 5 = is gi : * () The following information is given to you: Or (strat) (a) What is a stable dividend policy? Why should it be followed? eet aerigt fer ger at 2 Sra aR ei SCT ane? 7 (b) A company has a total investment of Rs. 500,000 in assets and 50000 outstanding ordinary shares. ofRs10 each. It earns a rate of 15% on its investment and has a policy of retaining 50% of the earnings. If the appropriate discount rate of the firm is 10%, determine _ the price of its share using Gordon’s model. : Uw aint ar Ga Prat uiteraferat 7 5,00,000 Fo afte 10 Bo aT 50,000 sara sere H Bi ae Fras we 15% a ae & oath aca B ate wae TPA HT 50% witercor eft Bi ae wt at SryaT- Tet 1056 & at at te ar er we eH ara ar Prefer afer Period covered a ne Average period allowed by supp! tess. : ‘ days Average credit period allowed to debeoss 6,00,000 Raw material consumed / s.0,000 Average stock of raw material " "0.000 Annual work in progiess inventory Rs 30,000 Average work in progress inventory pro. : a! Annual finished goods inventory Rs. 8,00,000 Average finished goods stock held Rs. 40,000 Total cost of sales Rs. 8,40,000 Compute: (i) Net operating cycle period (i) The number of Operating cycles in a year (ii) The amount of working capital. | 360 fet | rat arn sgn tah oa Reet am eign shar atte sefy as We a au 6,00,000 &° wel et oT cia ete 50,000 &o ta ‘v at afer ae 5,00,000 ©? artis; eae T% 30,000 ©? aitea aa Alet 8,00,000 ©? ae ae 40,000 © St wre 340,000 ©° afar 3 aT: a @ Pat ata Oh safe GS at F aia as Gerster Seat a ay ad (©) What do you mean by « " ! a underlying basic BOQ model’ lo By anfis area AT Ft aT FAT Bat V? sree HOQ Hise & Ws afiae aa 7 7 Or (30a) (a) The following are the details regarding the operation of a firm during a period of 12 months: Sales Rs 12 lakhs Selling price per unit Rs.10 Variable cost per unit Rs. 7 Total cost per unit Rs. 9 one month Credit period allowed to customers The firm is considering a proposal for a more liberal extension of credit which will result in increasing the average collection period from one month to two months. The relaxation is expected to increase the sales by 25% from its existing level. Advise the firm Tegarding adoption of new credit policy assuming firm's Tequired rate of return on investment is 25%. ait & Aart 19 are a erates & aaa wt at aha Tree Preafattad & Pang 12 aa *° We Rema aime utr az ye Reet arn afer ae 9 Fe WT ara wha ape 1 We Tet at & ag fee orate pro. wt ae S afte verre Rem & Re up wea a fran at Te & Rraa stam wae ora agar 1 WE @ me @ amet ae Rarer Pat J saat et Reset & wae at 25% ay aT sme F1 wat at as BRE Tice St ort S a | gee aire oie ae AT a wet (5 oot A Par oe nfm at alia

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