Financial Management M.B.A Question Paper : vardhaman.org
College : Vardhaman College Of Engineering
Degree : M.B.A
Semester : II
Subject : Financial Management
Document type : Question Paper
Website : vardhaman.org
Download Previous / Old Question Papers :
July 2012 : https://www.pdfquestion.in/uploads/vardhaman.org/6463-question%20papers%20of%20two%20year%20mba%20ii%20semester%20regular%20examinations%20july%20-%202012.pdf
July 2014 :https://www.pdfquestion.in/uploads/vardhaman.org/6463-MBA2R%20JUNE-JULY%2014.pdf
Vardhaman Financial Management Question Paper
MBA II Semester Regular Examinations June/July – 2014
(Master of Business Administration)
Date : 21
Time : 3 Hours
Max. Marks : 60
Related : Vardhaman College Of Engineering Statistics For Business Research M.B.A Question Paper : www.pdfquestion.in/6461.html
June 2014
Answer any FIVE Questions. All Questions carry equal marks
1. a) Mr. X wishes to determine the present value of the annuity consisting of cash inflows of Rs.1000 per year for 5 years. The rate of interest he can earn from the investment is 10 per cent. 8M
b) Explain the concept of ‘time value of money’? 4M
2. Contrast the IRR and NPV methods. Under what circumstances will they lead to comparable recommendations and conflicting recommendations. In which circumstances they give contradictory results, which criteria should be used to select the project and why? 12M
3. Explain why :
i. Debt is usually considered the cheapest source of financing available to the firm
ii. The cost of preference shares is less than the cost of equity
iii. The cost of retained earnings is less than the cost of new equity
iv. The cost of equity and retained earnings is not zero 12M
4. How would you determine the following:
i. The cost of equity in the NOI approach
ii. The value of equity, given the equity capitalization rate, EBIT and interest
iii. The overall capitalization rate, given the EBIT, value of equity and value of debentures 12M
5. A company belongs to a risk class for which the appropriate capitalization rate is 10 percent. It currently has outstanding 25,000 shares selling at Rs. 100 each. The firm is contemplating the declaration of dividend of Rs. 5 per share at the end of the current financial year. It expects to have a net income of Rs. 2,50,000 and has a proposal for making new investments of Rs. 5,00,000. Show that under the MM assumptions, the payment of dividend does not affect the value of the firm. 12M
6. a) How are net working capital, liquidity, technical insolvency and risk related? 6M
b) Length of operating cycle is a major determinant of working capital needs of a business firm. Explain 6M
7. a) What are the principal motives for holding cash? 5M
b) Explain the factors that determine the cash needs of the firm. Give examples to illustrate the short, long and procurements costs? 7M
8. A company produces a product which has a monthly demand of 4000 units. The product requires a component X which is purchased at Rs. 20. For every finished product one unit of component is required. The ordering cost is Rs. 120 per order and the holding cost is 10 percent per annum. You are required to calculate EOQ If the minimum lot size is to be supplied is 5,000 units, what is the extra cost the company has to incur and What is the minimum carrying cost the company has to incur? 12M
July – 2012
Two Year MBA II Semester Regular Examinations
FINANCIAL MANAGEMENT
(Master of Business Administration)
Time: 3 hours Max Marks: 60
Answer any FIVE Questions.
All Questions carry equal marks
All parts of the questions must be answered in one place only
1 Describe the reasons why Profit Maximization fails to be the consistent with wealth Maximization. 12M
2 Band Box is considering the purchase of a new wash and dry equipment in order to expand its operations. Two types of options are available: a Low Speed System (LSS) with a Rs 20,000 initial cost and a High Speed System (HSS) with an initial cost of Rs 30,000.Each system has a fifteen year life and no salvage value. The net cash flows after taxes(CFAT) associated with each investment proposal are: Particulars LSS HSS CFAT for years 1 through 15 Rs. 4,000 Rs. 6,000 Which speed system should be chosen by Band-Box with the help of NPV method, assuming 14 per cent cost of capital? 12M
3 In an organization what are the problems faced in determining the Cost of Capital relevant in capital budgeting decisions? 12M
4 The following information is regarding two companies X and Y. The company X does not use any debt in its financing. The company Y has RS.1,00,000. 5% debentures in its financing, both the companies having EBIT of RS.25,000 and equity capitalization rate is 10%. Assuming the corporate tax is 50%. Calculate the value of the firm and market value of equity shares using M – M approach. Is the MM thesis realistic with respect to capital structure and value of the firm? If not, what are it main weaknesses? 12M
5 To what extent are firms able to establish definite long run dividend policies? What factors would affect these policies? Mention the methods of dividend declaration by the firm. 12M
6 From the following projections of XYZ Company Ltd. For the next year, you are required to determine the working capital required by the company.
Annual Sales Rs.14,40,000
Cost of Production Rs.10,80,000
Raw Material purchases Rs. 7,05,000
Monthly expenditure Rs. 30,000
Estimated opening stock of raw material Rs.1,40,000
Estimated closing stock of raw materials Rs.1,25,000
Inventory norms :
Raw Materials – 2 months,
Work in progress – ½ month and finished goods – 1 month. The
firm enjoys a credit of ½ month on its purchases and allows one month credit on its sales.
On sales order, the company receive an advance Rs.15,000.
You may assume the production is carried out evenly through the year and minimum cash balance desired to be maintained is Rs.35,000. 12M
7 What is the need of Cash Management? Explain different models of Cash Management. 12M
8 Define Economic Order Quantity (EOQ). Explain with a suitable example along with its importance and limitations. 12M