Paper Code 209 ony AK MAA (INTERNATIONAL BUSINESS) | XAMINAT PART. 1(ESEMESTER H) FINANCIAL MANAGEMENT (MIBICT3) ION Maximum Marks: 60 Duration: Two Hours Note. This question paper has three parts as detailed below pat A has 10 Questions. a to j, all are compulsory and each carries O16 mark FNC has 06 questions. 210 7- attempt any 05, in maximum SO words cach, each part C has 03 questions. 8, 9 and 10 attempl any 02 of them. Each earries 15 marks ries 4 marks: yelow, Fill in the blank with Que 01. Draw a table in your answer book as per sample given Ds f below. Do not copy the entire suitable word(s) / options and write in relevant column as shown question in the answer book. Answer _ Que No. ¢ “w) : = (a) IRR is also known as. _ {by If Ke is 12% personal taxes applicable to shareholder are 30%, Kr would be % (c) Most important limitation of IRR is, its assumption (@) Higher degree of Financial Leverage benefits a firm only so tong as its ROA is {@) Incase Kd is 09% and taxes applicable are 30%, Ket would be __% (f) In case inflows of a project are uniform, itis advisable to use table of PV {2) Which of the following isnot a rationale of financial market intermediaries? (a) Higher transaction cost (b) Signaling (e) Confidentiality (4) Diversification (h) Which of the following is not true in respect of reduction of collection effort on debtors? {a) Increases sales (b) Increases bad debt loss (c) Longer average collection period (d) Increases collection expense (i) Cancelability is the feature of (a) Financial lease (b) Operating lease (c) Primary lease, (d) Tripartite lease G) Which of the following is not assumption of Walter model? (a) Firm is all equity, firm (b) Constant rate of return (c) Constant cost of capital (d) Growth rate is less than east of capital Part B (Attempt any FIVE) Que02 A firm purchases machinery worth Rs 90,00,000 and paiys Rs 2,50,000 as down payment. The remaining amount is paid in 9 charges 13% interest, calculate the amount of wal installments. If the supplier allment Contd. 2-— -2- Lage Vv & Cots Rs 70,00,000 The company 1% planning to adapy jy Que OF — Current sales of NV/ : 70.0 fi ht mn the increase 99 js 80% Theaverage collection perio 140 jy. § 615 80% 11%. The company falls in the tax bracket gy credit policy hich be 12% The variable cust to The cost of capital to the company 18 a 40% Should the company liberalise its credit policy due 04 “depres * and “normal busine clev sing, ‘deprecation’ a Que Od HMlustrate the concept of relevant inflows using pee 50.00 per share . ket for rupees 50.00 per share Que OS A company's share is available in the mad 50.00 per 7 Cane paying a dividend of Rupees 5.00 per share which is expected f0 prov constant rate of S% per annum. Which category of prospective investors woul g to buy this share” ; Que 06 Mention any two MOS important merits and two MOST important demerits of f Payback P thod of project appr Que 07 ™ feel Pre ig brea aor sc amount is Rs 18,00.000. The Lesse wants to earn Rs 4.00.00 profit from leasing. The lease period is 6 years. The cost capital of the Lessor is 14%, The tax rate applicable to the Lessor is 30%. Calculat the equated amount of lease rental to be charged from the lessee. Part C (Attempt any TWO) (Que 08 Assume three projects. each with life span of five years and each having uneven outflow of Rupees one lakh, For each project, assume different inflows over life s of projects, In each case caleulate (a) NPV i cost of capital is 10%, (b) PBP (c) W ane should be accepted and why’ (Present value of rupee I received at the each ye for five years is 0.909, 0.826 0.751. 0.683 and 0.621) Que 09 Financial data of three firms is wi Data Current Ratio Debtors turnover Inventory turnover Creditors turnover Investment turnov Gross Profit Margin 18% Net Profit Margin 15% Debt Equity Rati 3:5 "I ROA 20% 21% Assume that Stock constitute 50%. 40% and 30% of Current Assetg C respectively and cach firm had 300 working days, q Based on above information and further calculations, if req relevant observations / recommendations (Que 10 (a) Explain the M-M Approach on dividend policy (b) The ABC and Company has 10.000 equity shares of Rs 100 each, tyMASTER OF BUSINE Maximum Marks 70 All questions carry equal marks. Question numbe questions in sequence Que 1 Que 1* fa) Que 1* (b) Que 2 Que 2* Que 3 (a) Que 3 (b) Que 4 (a) Que 4 (b) Que 5 Paper Code: 1694 2018-2019 ADMINISTRATION EXAMINATIONS {RNATIONAL BL PART 1 - (SEMESTER) FINANCIAL MANAGEMENT MIBICI3 Time: 2 % Hours +: and 2 have alternatives. Try to answer all Discuss the importance of financial management reference to time value of money. decision making with OR ‘After 6 years from now, a company needs to finance a machine costing rupec® 30 Lakiee. It wishes to start saving money for this purpose. Bank can offer 13% interest on deposit, Calculate the amount of money to be deposited yearly with bank for this purpose. Discuss basic principles of finance Ilustrate the determination of working capital using suitable data of your choice. OR 'A firm expects to sell 80,000 units per annum. The carrying cost of inventory is Rs 2.00 per unit and cost of each unit is Rs 9.00. Per order cost is Rs. 60.00 Based on above, calculate economic order quantity (BOQ). If there is 3% discount on purchase of 3,000 or more units, explain why or why not order size be revised? Also discuss the selective inventory control methods briefly. Explain and illustrate the merits and demerits of Payback Period Method of Project Appraisal using relevant data. While evaluating a project using Present Value Method and Internal Rate of Return Method, at times disparities in life and size of projects result in contradictory recommendations. Elaborate with suitable example. Iustrate the concept of M.M. Hypothesis and highlight its limitations Ordinary share of a firm is currently being traded at rupees 40.00 per share. The firm paid dividend of rupees 4 per share in current year which is likely to grow 4 15% per annum. For ashareholder, whose Ke. is 10%, the share is overvalued or undervalued? Should he purchase this share or not? Mustrate M.M. Approach on dividend decision using suitable data of your choice. fixienu gus (I) Anema auestions Pach question carries 14 marks. Que ‘aemal cl 2) Use of programmable calculator and its exchange or borrowing is not gloved el) Que Hib) Que 24a) Que 2(b) Que 3a) Que 36) Que 3* n Marks: 70) 755 Paper Cod Session 2021-22 Master of Business, Administration Examinations _ Part h Term =I Course se NOs. MBAICI3 ‘ourse Title: Financial Management Time: Two and a Half Hours tion numbers 3 and 4 have inancial Management is all about maximization of sharcholders’ wealth. Comment on this statement (7 marks) You have won a prize of Rs. one million. The organizers offer you two options. Option ‘a’ is that you can claim the entire amount now and option *b” is Rs. 2,00,000 to be given in the beginning of every year for the next 7 years starting right now. If your expected rate of return is 10%, showing all calculations, explain by what margin value of one option is better than the other? Value of one rupee, received at the end of each year, discounted at 10%, from | to 7 years are; 0.909, 0.862, 0.751, 0.683, 0.621, 0.564, 0.513 and the value of one rupee received every year for 7 years is 4.868 ‘You may assume any other data if you wish and state your assumptions. (7 marks) Assuming data of your choice, illustrate how does a firm work out “investment in receivables” while deciding “Credit Standards” and “Credit Terms” (7 marks) Assuming annual inventory requirements equal to 100 times of your roll number, per Unit inventory carrying cost equals 10 times of sum of the digits of your enrolment number and ordering cost as Rupees 1,000/= per order, find out BOQ. (7 marks) Work out “payback period” ‘of your education assuming ‘outflow from class XI onwards till completion of Master's degree. ‘Show all calculations clearly. You can assume any ‘other information / data and state it clearly (7 marks) While calculating relevant inflows or ‘outflows of a project, we often use terms like “written down value, salvage value and working capital recovery”. Explain these terms and their relevance in decision making a marks) ow and write [4 relevant observations related to pros and der the data given b Eee or ‘of any one of the given projects. (14 marks) cons of deciding in favou Years Cash flows -"X" Cash flows -*Y" Cash flows = ‘2° 7 5,00,000 ~5,00,000 =5,00,000 ; 1,00,000 2,50,000 100000 2 150.000, 1,50,000 100000 5 3,50,000 96,000 100000 + 2,00,000 104,000 200000 : 100,000, 200,000 400000 Tears 1 days TYears Pop 32% 36% ARR. ~_ Rs. 118,750 Rs. 133,600 ) a 20% (approximately) | 18%(approximately) Contd... wtQue diay Que (by Que 4 275¢ ‘ e can be issued and ree erms under which a debenture can eemed, Pe ane ane erro oT con oF debt (ka afer axes (7 marks) ieee a ae ev eine opens pagina 2.00 as DPS which share ofthis Co! Also write down one imitation of the model you might have used in shave of this Co? Aiso arvingat his desson. 7 mah) ces 8 DIE Ratios of a firm (from *A* to “H°) on jg) Jiven below data shows the effects of 8 D/ ity EPS. Based on this write any O7 relevant observations onthe pros wad ons of suey ratios and financial leverage. (14 marks) 7 a Details / options alee CRED em SEG 1. Assets 100 { 1900 | 1000 | 1000 | 1000 | 1000 | T000 fron 2 Fquiy x00} roa] 600} 300] 400] 300] 200] 109 3.10% Debt 200| 300} 400} 500] 600| 700 800] 909 4, Debt Equity Ratio ta | 3:7 | 23 | it [3:2 [93 Tan Py. | 5. Return on Assets 20% 200} 200} 200} 200} 200 200} 200} 200 6. Less Interest 20 30, 40. 50 60 70 80] 9 7, EAIBT 180|_ 170} 160] 150] 140 130] 120] Ho 8. Less Taxes 90 85. 80 75 70 65 60] 55 9. EAIT 90 85, 80 75 70 65 60} 55 10. Nos. of Shares 80 70 60 50 40 30, 20 10 U Earnings Per Share 143] 1.20 1.33] 1.50 1.75 | 2.17| 3.00[ 5.50 Que 5(a) Briefly explain the recom: ‘mendations and assumptions of Walter's Model of dividend decisions (7 marks) Que 5(b) Explain the steps that a lessor takes to determine the breakeven lease rentals. Illustration is not required. (7 marks)