Roll No. ……………………….

RNB GLOBAL UNIVERSITY, BIKANER

BBA-III SEMESTER SESSIONAL EXAMINATION-II,OCTOBER 2021
11005200– FINANCIAL MANAGEMENT

Time: 90 Minutes Maximum Marks: 30

Instructions :
1) Write your roll no. on the top immediately on receipt of this question paper.
2) In Sec-A each question carries2 marks, attempt any 5 questions, answer theory questions in minimum 150
words.
3) In Sec-B each question carries 5 marks, attempt any two questions, answer in minimum 300 words.
4) In Sec-C, each question carries10 marks, attempt any one question, answer in minimum 650-700 words
Draw Charts/Diagrams/Figures/Flowcharts etc. Wherever applicable/possible.
5) Word Limit is not applicable for Numerical based Questions.
6) In case of over attempted questions, the answer with highest marks will be considered.
7) Write the word “END” at the finish of the last attempted answer & cross the remaining pages.

SECTION-A 10

Q.1 Illustrate the concept of average cost of capital with the help of an example?

Q.2 Briefly explain the importance of cost of equity capital?

Q.3 Why are the capital investments important?

Q.4 What is the relation between the payback period and the quality of project?

Q.5 XYZ & Co. issues 2,000 10% preference shares of Rs100 each at Rs 95 each. Calculate the cost of
preference shares.

Q.6 ABC Ltd plans to issue 1, 00,000 new equity share of Rs. 10 each at par. The floatation costs are
expected to be 5% of the share price. The company pays a dividend of Rs. 1 per share and the
growth rate in dividend is expected to be 5%. Compute the cost of new issue share.

SECTION-B 10

Q.7 A company issues 1, 00,000 12% preference share of Rs. 10 each. Calculate the cost of
preference capital if it is redeemable after 10 years.

a) At par b) at 10 % premium(2+3=5 Marks)

Q.8 A company issued 10,000, 15 % preference share of Rs. 10 each, Cost of issue is Rs. 1 per share.
Calculate cost of capital, of these shares are not issued (a) at par , (b) at 5% premium, and (c) at
8% discount.(1+2+2=5Marks)

Q.9 Briefly explain and illustrate the concept of time ‘value of money’.

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 SECTION-C 10

Q.10 Calculate the cost of weighted average cost of capital from the following information given
below:

Source of Funds Amount(Rs) After Tax cost %

Debt 4000000 4.5
Preference shares 2000000 9.0
Equity Shares 6000000 11.0
Retained Earnings 8000000 10.0

Q.11 Define the concept of capital budgeting. Discuss in detail with the help of examples non
discounted techniques of budgeting.(5+5=10 Marks)

BBA-III- Sessional Examination II – 2021-11005200 Page 2 of 2