SVKM’S NMIMS ‘SHOBHABEN PRATAPBHAI PATEL SCHOOL OF PHARMACY & TECHNOLOGY MANAGEMENT Academic Year: 2016-2017 Program: M.Pharm+MBA (Pharma.Tech.) Pharmacentics/Qualiy Assurance YearIII_ Semester: V ‘Time: 2.00 pm to 4.00 pm(2hrs) No.of Pages:_2 Final Examination Instructions: Candidates should read carefully the instructions printed on the question paper and on the cover of the answer ‘book, which is provided for their use. 4. Question No. 1 is compulsory 2. Outof Question 2t0 7 attempt any 3 3. Imall4 questions to be attempted 4. Answer to each new question to be started on a fresh page 5._Figures in bracket on the right hand side indicate full marks Question 1(a) (a5) Pepsi Co. is planning to replace one of its machines with a new one. The old machine has a purchase value of Rs.10,00,000 and a useful ife of 10 years. The machine was bought 5 years back. The company does not expect to realize any returns from scrapping, the old machine at the end of 10 years but if itis sold to another company in the industry it would receive Rs.600,000 for it. ‘The new machine has a purchase price of RS.20,00,000. It has an estimated salvage of Rs.200,000 and useful life of years. The new ‘machine will have a greater capacity and annual sales are expected to increase from Rs.10,00,000 to Rs. 12,00,000. Operating, efficiencies with new machine will also produce savings of Rs.200,000 a year. Depreciation is on SLM over a ten year life. Cost of capital is 8% and 50% taxis applicable. Based on the NPV and Pl should the machine be replaced? (0) 6) _Annual Sales of a company is Rs. 60 lacs. Sales to variable cost ratio are 150% and fixed cost other than interest is Rs. 5 lacs pa. ‘ompany has 11% debentures of Rs. 30 lacs. Calculate Operating and Financial Leverage of the company. Question2 (20) Sun Ltd, Has an annual sales of Rs.20 lakhs and debtors collection period of 3 weeks. The company is planning for a liberal credit policy & has proposed two policies as under: alicy No. | ____Increasein d debts ____| Collection period to | “Sales 1 | 4weeks 250,000, 3% 2 | 6weeks "350,000 3% The selling price of the product is Rs.10 per unit, variable cost Rs.7 per unit. The current bad debts are 1% and expected return is 20%, Evaluate the policies assuming 52 weeks in a year. %‘Question 3 (20) _Presarea working capital estimate to finance an activity level of 2.000 units a yea (52 weeks) based on the following data: _) raw Materials ~Rs.400 per unit; Direct Labour ~ Rs.150 per unit ; Overheads (Manufacturing) ~ Rs.200 per unit Overheads (Selling & Distribution) ~ Rs, 100 per unit Selling Price ~ Rs.1,000 per unit, Raw materials & Finished Goods remain in stock for 4 weeks, work in process takes 4 weeks Debtors are allowed 8 weeks for payment whereas creditors allow us 4 weeks. ‘Minimum cash balance expected is Rs 50,000. Debtors are valued at Selling Price. Question 4 (10) Pick the correct answer from the given options: SSLNo. | Question ‘Option 2 Option 2 ‘What isthe value of Rs.1,000 deposited today for 5 1 | years at 8% interest rate s.1,500 12 years you are to receive Rs.10,000. I the interest rate were to suddenly decrease, the remains cannot be __2 | present value of that future amount to you would ~ | fall _| tise unchanged _| determined ‘What is the value of Rs.10,000 deposited today for 3| 10 years at 10% interestrate .25,379 .25,973 £s.25,793, s.25,937 Which of the following investment alternatives 10% 105% 10.25% would provide the greatest ending wealth for your | compounded | compounded | compounded 4 | investment? daily annually quarterly | ‘What will be the approximate population of the ‘country, if ts current population of 280 crores {grows at a compound rate of 2% annually for 25, S| years aizcrores | 430-crores 460crores__| 488crores_| Question S : (10) > Ad, has the following capital structure: "400000 Equity Shares | 8,000,000 16% Preference Shares | 4,000,000 | [ 8% Debentures 8,000,000 TOTAL 720,000,000 The share of the company sells for RS.20. It is expected that the company will pay Rs.2 per share as dividend in the future, growing bby 5% every year. Taxis @ 50%. Compute the WAC of the company. Question 6 (20) 2) Discuss in brief the objectives of financial management. ) What are the motives for holding cash? ‘Question 7 (20) Discuss in brief the features of the DPCO, 2016. —— Ye