Academic Year: 2017-18 Programme: M. Pharm + MBA (Pharmaceutics) Year: Ill Semester: V ‘Subject: Financial Management II Marks: 50 Bateh: 2017-18 1 May 2018 Time: 10,00 am to 12.00 noon Duration: (2 Hrs) No of Pages: 0 2— RE-EXAMINATION Date: 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. 1. Question No. 1is compulsory 2. Out of Question 2 to 7 attempt any 3 3, Inall 4 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) ABC Lts is planning to purchase a machine & has two options ~X or V. Based on Pl method suggest the best option: Particluars |X y Cost ‘400000 | $60000 Life Syears | 7 years PAT Year 12000 | 10000 - 12000 | 40000 ‘42000 | 40000 24000 | 20000 - 112000 | 10000 10000 10000 Cost of capital is 10% and depreciation for both the machines is Rs.80,000 per annum each (o) (5) Annual Sales of a company is Rs. 160 lacs. Sales to variable cost ratio are 125% and fixed cost other than interest is Rs. 15 lacs p.a. Company has 10% debentures of Rs. 20 lacs. Calculate Operating and Financial Leverage of the company Question 2 (10) Zapata & Co. whose current sales are Rs.600,000 per annum and an average collection period is 30 days wants to pursue a more liberal credit policy to improve sales. Credit Policy | increase in collection period (Days) | Increase in Sales (Rs) | % Default 10 30,000 1.50% 8 20 48000 2% c 30 75000 3% oa 90000 4%, Selling price per unit is Rs.3, Average cost per unit is Rs.2.25 and Variable cost per unit is Rs.2. Current bad debts loss is 1%, expected Return is 20%. Assuming 360 days a year, which of the above policies would you recommend? yeQuestion 3 (29) Prepare a working capital estimate to finance an activity level of 104,000 units a year (52 weeks) based on the following data: Raw Materials ~ Rs.80 per unit Direct Labour ~ Rs.30 per unit (Overheads ~ Rs.60 per unit Selling Price ~ Rs.200 per unit, Raw materials & Finished Goods remain in stock for a month, work in process takes 1/2 month, Debtors are allowed 2 months for payment whereas creditors allow us 1 month. Lag in payment of overheads is a month & wages is 1% weeks. 1/4" of the output is sold for cash & minimum cash balance expected is Rs.25,000. Debtors are valued at Selling Price. Question 4 (10) Pick the correct answer from the given options: Si.No. | Question Option Option 2 Option 3 Option 4 | ‘What is the value of Rs.10,000 deposited 1 | today for 7 years at 7% interest rate Rs.14,900 Rs.16,008 Rs.16,058 Rs.16,078 | In2 years you are to receive Rs.10,000. if the interest rate were to suddenly increase, the present value of that future amount to remains cannot be 2 | you would - fall rise unchanged determined {fa bank offers a firm a simple interest loan of Rs. 1000 for 120 days at a cost of Rs. 60. interest, what is the effective rate of none of the 3 | interest on the loan 18% 6% 20% | mentioned Which of the following investment 10% 10.5% 10.25% 10.3% alternatives would provide the greatest compounded | compounded —_| compounded ‘compounded 4 | ending wealth for your investment? daily annually quarterly half yearly. | ‘What is the present value of a perpetuity of |___5 | Rs.100 ifthe discount rate is 10% s.1,000 5.10 3.100 s.10,000 Question 5 (20) M Ltd is planning an expansion programme for which it needs Rs.30 crores and has following options for funding a. Issue further equity shares of Rs.100 each at par b. Raise loans at 15% interest Issue preference shares at 12% Present capital is Rs.60 crores and EBITis Rs.12 crores. Tax rate is 50% & post expansion EBIT is Rs.15 crores. Calculate EPS under the three options & suggest the best one. Question 6 a) Discuss in brief the factors determing working capital requirements. 'b) Discuss in brief the types of Leverages. Question 7 Discuss in brief the features of the DPCO, 2016. (20) (20)