lllllll]ilt il|ililt flililrllr ilfl ilil ril rilr 6017n017
lv semester 5 Year B.B.A.LL.B./B.Com. LL.B. Examination,
OctoberlNovemb dr 2021
FINANCIAL MANAGEMENT
Duration : 3 Hours Max. Marks : 80
1. Answer any five questions from group (a). Each
'@- question carries 10 marks.
2. Answer any five questions from group (b). Each
LIBRARY B question carries 6 marks.
3. Answers should be written only in Engtish.
Q. No. 1. (a) From the following capital structure of a company, calculate
the overall cost of capital using Marks : 10
(a) Book value weights.
(b) Market value weights.
Source Book value Market value
Equity share capital
(t 10 per share) 45,000 90,000
Retained earnings 15,000
Preference share capital 10,000 10,000
Debentures 30,000 30,000
The after tax cost of different sources of finance are as foltows :
Share capital : 14o/o, Retained earnings : 13o/o, Preference share
capital : 10Y", Debentures : 5%.
Q. No. 1. (b)Explain the significance of cost of capital. Marks : 6
Q. No. 2. (a) calculate the weighted average cost of capital. Both book
value and market value weights after tax for the following.
The tax rate is 50%. Marks : 10
Sources of Capital Book Value Market Value Cost of each
Source Before Tax
Equity Capital 2,50,000 5,00,000 24.44Yo
Pref. Capital 1,00,000 1,50,000 27.29o/o
Debt. Capital 5,00,000 6,50,000 7.99%
Retained Earnings 1,50,000 18.33o/"
Q. No. 2. (b)Explain the role of a Finance Manager. Marks : 6
P.T.O.
6a7r7u7 -2- lllllllllllllllllllllllllllllllllllllffillllllll
Q. No. 3. (a) Define capital structure. Explain-the factors determining
capital structure. , Marks: 10
Q. No. 3. (b) Write a short note on : Marks : 6
(1) Traditional approach.
(2) Net income approach.
(3) Net operating income approach.
:."__"__=:,\
planned
Q. No. 4. (alPQR Ltd. has 2,00,000 shares outstanding and is ..\
iinancial
to declare a dividend to t 5/- at the end of current
year.ThepresentmarketpriceisT100.Thecostofequity
. ,
capitalK"maybetakenat1O%,UsingMMmodeland
assuming no taxes, ascertain the price of the company,s
share as it is likely to prevail at the end of the yeai. Marks : 10
(i) When dividend is declared and
(ii) When no dividend is dectared ?
The company expects to have a net income of r 20,00,000
during the year I and is planning to make an investment of
{ 40,00,000 at the end of the year.
Q. No' 4. (b)Discuss the various types of dividend poricy. Marks: 6
Q. No. 5. (a) Krupa co. Ltd. has requested you to prepare a statement
showing the working capital requirementfor a level of activity
of 1,86,000 units production. The foilowing information is
available. Marks: 10
Particulars Rate per Unit
Raw materials g0
Overheads 75
Direct labour 40
Total cost 20S
Profit 60
Seiling price 265
(1) Raw materiars are in stock, on an average 1 month.
(2) Materials are in process, s}yocomplete for average 2 weeks.
(3) Finished goods are in stock, on an average 1 month
(Hotding period).
(4) Credit allowed by suppliers, one month.
,}
Iililil ]til illl ffit lllil ffil ililt ililt il]ilt
60,|7n017
(5) The rag in payments from debtors is 2 months.
(6) Lag in payments of wages, 1 and a hatf weeks.
- (7) Lag in payment of overheads 1 month. z0% otoutput
is
sold against cash. cash in hand and at bank is expected
to be 60,000. lt is to be assumed that the production
is carried on evenry throughout the year. wages and
overheads are occur similarly and a time period of
4 weeks is equivalent to a month.
Q- No. 5. (b) write the advantages of working capitar.
Marks : 6
Q. No. 6. (a) what is working capital management ? Explain factors
determining working capital management.
Marks : 10
Q. No. 6. (b)write a short note on working capitar cycre.
Marks : 6
Q. No. 7. (a)XYZ company is considering an investment proposal
to
install new machine at a cost of T 1,00,000. ihe facility
has a rife of 5 years and no sarvage varue. The tax rai"s
is 3s%. Assume the firm uses straight line depreciation
for tax purposes Marks : 10
Year GFBr (() PV factor at 10Yo
I 10,000 0.909
2 10,692 0.826
3 12,769 0.251
4 13,462 0.683
5 20,393 0.621
Calculate :
(A) Payback period
(B) ARR
(c) NPV @ 10%
(D) Pt @ rc%
Q. No. Z. (b)Write a short note on :
Marks : 6
(a) Profitability index method.
(b) lnternal rate of return method.
6017n0l.7 r ll!ffi til ilr llllr lllll lffi ililflr ril rilr
Q. No. 8. (a) What do you understand by a eapital budgeting decision ?
Why is capital budgeting so important to management ? Marks : 10
Q. No. g. (b) Explain factors influencing capital structure of an MNC. Marks : 6
Q. No. 9. (a) S Ltd. is acquiring P Ltd. The shareholders of T Ltd. would
receive 0.8 shares of S Ltd. for each share held by them.
The merger is not expected to yietd in economies of scale
and operating synergy. The relevant data for the two
companies are as follows : Marks : 10
Particulars A B
Net Sales (T crore) 700 250
Profit after tax (T crore) 120 25
Number of shares (crore) 24 6
Earning per share (t) 4.83 4
Market value per share (T) 30 2A
Price earning ratio 6.21 5
For the combined company (after merger), you are
required to calculate :
(a) EPS
(b) P/E ratio
(c) Market value per share.
Q. No. 9. (b) Write a short note on : Marks : 6
(1) Types of merger
(2) Reasons for merger.
Q. No. 10. (a) What do you mean by financial managements ? Briefly
management.
explain the functions of financial Marks : 10
Q. No. 10. (b) Write a note on Shorpe Linther Model. Marks : 6
