Seat No. Enrolment No, GUJARAT TECHNOLOGICAL UNIVERSITY, MBA - SEMESTER - Il - EXAMINATION - SUMMER 2022 Subject Code: 4529202 Subject Name: Corporate Finance ‘Time: 10:30 AM TO 01:30 PM Instructions: 1. Attempt all questions. 2. Make suitable assemptions wherever necessary. ‘3 Fiquresto the right indicate fall marks. Question Text and Description Marks Ne. Qa. |, Payback peried “ ‘Time Value of Money Net Present Value (NPV) Sinking fund Capital rationing Dividend Financial leverage Q.2 (a) Explain nature and scope of Financial Management o7 () Mr. Jignesh fas borrowed loan amounting to Rs.30,00,000 for 607 ‘years. Bank is charging 12% rate of interest on loan, Calculate the annual installment and prepare loan amortization schedule for 6 years, oR (b) Discuss the limitations of “Profit Maximization” goal of Finance. 07 3. (a) Abascus Limited issued 15 Years, 14 %i bonds five years ago. The bond which has a face 07 value of Rs. 100 and is currently selling for [Link] (1) Pre tax costof debt? (2) What is the ater tax cost of Debt? (®) Write short note on techniques of Capit budgeting, or or (a) investors deposits Rs.100 in bank account for 5 yearsat 8 % interestfnd out the amount 07 ‘which he will have in his account if interest Ieompounded (a) annually (b) Semiannually aad (C) quarterly (b) Whatis the difference between the future Value and Present Value? Q4 (a) Write short note on Operating eyele o (©) Company X and Company Y are in the same risk class and are identical in every respect 07 ‘excepi their company X uses Debts, While company Y does not The levered firm hs Rs.900000 debentures, carrying 10 % interest. Both the firm 20 % ‘operating profit on their total assets of Rs.15 lakh. Tax rate is 35 % and capitalization rate of 15% (1) Compute the value of firms X and Y using the Net Income Approach. (2) Compute the value of firms X and Y using the Net Operating incom OR preach(a) What are the factors that determine the dividend policy of company? Do you believe it will 07 i) Qs Qs be justifiable for a company to obtain a short term Joan froma bank allow payment of a dividend? The following information is available for Avanti Corporation Earnings per Share Rs4.00 Rate of Return on investment 18%, Rate of return required by shareholders: 15 %. ‘What will the price per share as per Walter Medel if the pa Pereent?60 Percent? @ ) @) } wri in ortes aeeu 10r Gis mansyemen, CASE STUDY: “Para Ird”is planning to start a project which produces product for end users. The machine cost Rs. 10, 00,000 and has useful life of 5 years. The cash flow after tax (CFAT) of the project is as follows: ‘Year | _CFAT 3,50,000 3,00,000 2,50,000 3,00,000 2,00,000 Calculate Pay-back period and NPV @10%. Comment on result Calculate Intemal rate of retum of the project. oR fcost of Project is Rs.11, 00,000 re-calculate Pay-back period and NPV @10% also comment on result. Calculate Internal rate of return of project (If cost of project is Rs.11,00,000) .yout ratio is 40 Percent ?, SO 07 07 07 7