No.

of Printed Pages : 3 MMPC-014

MASTER OF BUSINESS

ADMINISTRATION/MASTER OF

BUSINESS FINANCE

(BANKING/FINANCE) (MBA/MBF)

Term-End Examination

June, 2022
MMPC-014 : FINANCIAL MANAGEMENT

Time : 3 Hours Maximum Marks : 100

Note : (i) Attempt any five questions.

(ii) All questions carry equal marks.

1. Explain the nature of Finance Function and

discuss the approaches of Financial

Management.

P. T. O.
 [2] MMPC-014

2. Explain the concept of ‘Future ‘Value’ and

describe how it is calculated. Bring out the
difference between Future Value and Present
Value.

3. What is the need for Valuation ? What is the

genesis of it ? Explain the various ways in
which term value can be defined.

4. Why is Cost of Equity Capital difficult to

measure ? Discuss the different methods of
computing Cost of Equity Capital.

5. Discuss Equity Capital and Debt Capital as

sources of long-term capital bringing out
the advantages and disadvantages of each
source.

6. What is the meaning of ‘Behavioural Finance’ ?

Discuss any five biases that influence
investment decisions of an investor.

7. Explain the concept of Capital Structure.

Discuss the various determinants of a capital
structure.
 [3]

8. Aravind Motors Ltd. is considering two

mutually exclusive projects. Both require an
initial cash outlay of ` 10,000 each for
machinery and have a life of 5 years. The
company’s required rate of return is 10% and it
pays tax at 50%. The projects will be
depreciated on a straight-line basis. The net
cash flows (before taxes) expected to be
generated by the projects and present value
(PV) factor (at 10%) are as follows :

PV factor (at
Year Project 1 Project 2
10%)

1 4,000 6,000 0.909

2 4,000 3,000 0.826
3 4,000 2,000 0.751
4 4,000 5,000 0.683
5 4,000 5,000 0.621

You are required to calculate and suggest which

project is better under :
(i) the Pay Back Period method
(ii) the NPV and Profitability Index methods.
MMPC–014
No. of Printed Pages : 2 MMPC-014

MASTER OF BUSINESS
ADMINISTRATION/MASTER OF BUSINESS
FINANCE (BANKING/FINANCE) (MBA/MBF)
Term-End Examination
December, 2022

MMPC-014 : FINANCIAL MANAGEMENT

Time : 3 hours Maximum Marks : 100

Note : Attempt any five questions. All questions carry

equal marks.

1. Discuss different types of Financial Decisions

that are taken in an organisation.

2. What is the meaning of Investment Risk ?

Explain briefly the various sources of risk in
investments.

3. Explain the need for ‘Valuation’. Describe the

Three-Step (EIC) Valuation Process.

4. What is ‘Cost of Capital’ ? What are the basic

characteristics of ‘Cost of Capital’ ? Discuss the
different classes of Cost of Capital.

MMPC-014 1 P.T.O.
5. What is ‘Money Market’ ? What is its significance ?
Discuss different participants in the Money
Markets.

6. Why is Dividend decision important for a firm ?

Discuss different forms of Dividends.

7. What is Financial Restructuring ? Discuss

‘Buy-back of Shares’ as a method of financial
restructuring.

8. Cimbla Ltd. is considering investing in a project.

The expected original investment in the project
will be < 2,00,000, the life of the project will be
5 years with no salvage value. The expected net
cash inflows after depreciation but before tax
during the life of the project will be the following :
Year 1 2 3 4 5
< 85,000 1,00,000 80,000 80,000 40,000
The project will be depreciated at the rate of
20% on original cost. The company is subjected to
30% tax rate.
Required :
(a) Calculate Payback Period.
(b) Calculate Net Present Value and
Profitability Index, if cost of capital is 10%.
The P.V. factors at 10% are :
Year 1 2 3 4 5
0909 0826 0751 0683 0621

MMPC-014 2
No. of Printed Pages : 3 MMPC-014

MASTER OF BUSINESS
ADMINISTRATION/MASTER OF
BUSINESS FINANCE
(BANKING/FINANCE) (MBA/MBF)
Term-End Examination
June, 2023
MMPC-014 : FINANCIAL MANAGEMENT
Time : 3 Hours Maximum Marks : 100

Note : (i) Attempt any five questions.

(ii) All questions carry equal marks.

1. Discuss the concepts of ‘Wealth Maximisation’

and ‘Profit Maximisation’ and bring out
differences between them.
2. Explain the concept of Investment Risk.
Discuss the different types of risk.
3. Explain the need for ‘Valuation’. Discuss the
different types of business valuation
approaches.
4. What is a ‘Financial Market’ ? Discuss the role
and funtions of Financial Markets.

P. T. O.
 [2] MMPC-014

5. Discuss ‘Trade Credit’ and Factoring” as source

of short-term capital and bring out its
advantage and disadvantages.
6. Explain the features of an appropriate capital
structure and discuss the determinants of
capital structure of a firm.
7. What is Behavioral Finance ? Which decision-
making errors and biases hinder the rational
investment decisions ?
8. A Company is considering a proposal of
installing drying equipment. The equipment
would involve a cash outlay of Rs. 6,00,000. The
expected life of the project is 5 years without
any salvage value. Assume that the company is
allowed to change depreciation on straight line
basis for income tax purpose. The estimated
before tax cash inflows are given below :
Before tax cash inflows :
(` ’000)
Year
1 240
2 275
3 210
4 180
5 160
 [3]

The applicable income tax rate to the company

is 35%. The company’s opportunity cost of
capital is 12%. Evaluate the investment
proposal using the payback period, net present
value and profitability index methods.
The PV factors at 12% are :
Year PV factor at 12%
1 0.8929
2 0.7972
3 0.7118
4 0.6355
5 0.5674

MMPC–014