Download JNTUH MBA 2018 May 2nd Semester Financial Management Question Paper

Download JNTUH (Jawaharlal Nehru Technological University Hyderabad) MBA (Master of Business Administration) R16 2018 May Second Semester (2nd Sem) Financial Management Question Paper.

HallTicketNo QuestionPaperCode:CMB008
.
.
MBAIISemesterEndExaminations(Regular)-May/June,2018
Regulation: .?R16
FINANCIALMANAGEMENT
Time: 3Hours (MBA) MaxMarks: 70
AnswerONEQuestionfromeachUnit
AllQuestionsCarryEqualMarks
Allpartsofthequestionmustbeansweredinoneplaceonly
UNIT?I
1. (a) Criticallyevaluatethegoalsofmaximizationofpro?tandmaximizationofreturnonequity.
[7M]
(b) ?Maximizationofwealthprovidesthemoreusefulandmeaningfulguidancethanthemaximiza-
tionofpro?tsfortheevaluationof?nancialactionordecision?.Doyouagree?Explain. [7M]
2. (a) Explainthemechanismofcalculatingpresentvalueofcash?owsgivingsuitableexamples.[7M]
(b) CalculatethepresentvalueofthefollowingcashstreamdatashowninTable1ifthediscount
rateis14percent. [7M]
Table1
Year 0 1 2 3 4
Cash?ow 5000 6000 8000 9000 8000
UNIT?II
3. (a) Discussabouttxraditionalmethodsanditsmeritsanddemerits. [7M]
(b) FromtheTable2capitalstructureofacompany,calculatetheoverallcostofcapital,usingbook
valueweightsandmarketvalueweights. [7M]
Table2
Source CostofCapital-% BookValue MarketValue
Eq.ShareCapital(Rs.10shares) 14 45000 90000
Retainedearnings 13 15000 30000
Preferencesharecapital 10 10000 10000
Page1of3
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HallTicketNo QuestionPaperCode:CMB008
.
.
MBAIISemesterEndExaminations(Regular)-May/June,2018
Regulation: .?R16
FINANCIALMANAGEMENT
Time: 3Hours (MBA) MaxMarks: 70
AnswerONEQuestionfromeachUnit
AllQuestionsCarryEqualMarks
Allpartsofthequestionmustbeansweredinoneplaceonly
UNIT?I
1. (a) Criticallyevaluatethegoalsofmaximizationofpro?tandmaximizationofreturnonequity.
[7M]
(b) ?Maximizationofwealthprovidesthemoreusefulandmeaningfulguidancethanthemaximiza-
tionofpro?tsfortheevaluationof?nancialactionordecision?.Doyouagree?Explain. [7M]
2. (a) Explainthemechanismofcalculatingpresentvalueofcash?owsgivingsuitableexamples.[7M]
(b) CalculatethepresentvalueofthefollowingcashstreamdatashowninTable1ifthediscount
rateis14percent. [7M]
Table1
Year 0 1 2 3 4
Cash?ow 5000 6000 8000 9000 8000
UNIT?II
3. (a) Discussabouttxraditionalmethodsanditsmeritsanddemerits. [7M]
(b) FromtheTable2capitalstructureofacompany,calculatetheoverallcostofcapital,usingbook
valueweightsandmarketvalueweights. [7M]
Table2
Source CostofCapital-% BookValue MarketValue
Eq.ShareCapital(Rs.10shares) 14 45000 90000
Retainedearnings 13 15000 30000
Preferencesharecapital 10 10000 10000
Page1of3
4. (a) Discusstheprocedurefordeterminingtheweightedmarginalcostofcapital. [7M]
(b) The initial cash outlay of a project is Rs.50,000 and it generates cash in?ows of Rs.20000,
Rs.15000,Rs.25000and10000infouryears. Usingpresentvalueindexmethod,appraiseprof-
itabilityoftheproposedinvestmentassuming10%rateofdiscount. [7M]
UNIT?III
5. (a) ExaminetherelationshipbetweenNIandNOIapproach. [7M]
(b) BabuTradingCompanyhassalesofRs.1Lakh.Thevariablecostsare40%ofthesaleswhilethe
?xedoperatingcostsamountofRs.30000.TheamountofinterestonlongtermdebtisRs.10000.
Youarerequiredtocalculatethecompositeleverageandillustrateitsimpactifsalesincreaseby
5%. [7M]
6. (a) De?ne?nancialleverage.Explainitsimportance. [7M]
(b) ExplaintheconceptofMMtheoryofcapitalstructure. [7M]
UNIT?IV
7. (a) De?neDividend.ExplainitsdeterminingfactorundervariousDividendtheories. [7M]
(b) De?neworkingcapital.Discussthedeterminantsofworkingcapital [7M]
8. (a) Discusstheapproachesfor?nancingcurrentassets. [7M]
(b) DiscusstherelevantapproachonadividenddecisiongivenbyJamesWalteranditslimitations.
[7M]
UNIT?V
9. (a) Describebrie?ythecomponentsofworkingcapital. [7M]
(b) XYZcompanyplanstoachieveannualsalesof1,00,000unitsfortheyear2005.Thefollowingis
thecoststructureofthecompanyaspertheprevious?gures. [7M]
Materials 50%
Labour 20%
Overheads 10%
Thefollowingfurtherparticularsareavailablefromtherecordsofthecompany.
i. Rawmaterialsareexpectedtoremaininstoresforanaverageperiodofonemonthbefore
issuetoproduction.
ii. Finishedgoodsaretostayinthewarehousefortwomonthsonanaveragebeforebeingsold
andsenttocustomers.
iii. Eachunitofproductionwillbeinprocessforonemonthontheaverage.
iv. Thecreditallowedbythesuppliersofrawmaterialisonemonthfromthedateofdelivery
ofmaterials.
v. Debtorsareallowedcreditfortwomonthsfromthedateofsaleofgoods
vi. SellingpriceperunitisRs.9perunit
vii. Productionandsalesfollowaconsistentpatternandtherearenowide?uctuations.
Determinethequantumofworkingcapitalrequiredto?nancetheactivitylevelof1,00,000unit
fortheyear2005.
Page2of3
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HallTicketNo QuestionPaperCode:CMB008
.
.
MBAIISemesterEndExaminations(Regular)-May/June,2018
Regulation: .?R16
FINANCIALMANAGEMENT
Time: 3Hours (MBA) MaxMarks: 70
AnswerONEQuestionfromeachUnit
AllQuestionsCarryEqualMarks
Allpartsofthequestionmustbeansweredinoneplaceonly
UNIT?I
1. (a) Criticallyevaluatethegoalsofmaximizationofpro?tandmaximizationofreturnonequity.
[7M]
(b) ?Maximizationofwealthprovidesthemoreusefulandmeaningfulguidancethanthemaximiza-
tionofpro?tsfortheevaluationof?nancialactionordecision?.Doyouagree?Explain. [7M]
2. (a) Explainthemechanismofcalculatingpresentvalueofcash?owsgivingsuitableexamples.[7M]
(b) CalculatethepresentvalueofthefollowingcashstreamdatashowninTable1ifthediscount
rateis14percent. [7M]
Table1
Year 0 1 2 3 4
Cash?ow 5000 6000 8000 9000 8000
UNIT?II
3. (a) Discussabouttxraditionalmethodsanditsmeritsanddemerits. [7M]
(b) FromtheTable2capitalstructureofacompany,calculatetheoverallcostofcapital,usingbook
valueweightsandmarketvalueweights. [7M]
Table2
Source CostofCapital-% BookValue MarketValue
Eq.ShareCapital(Rs.10shares) 14 45000 90000
Retainedearnings 13 15000 30000
Preferencesharecapital 10 10000 10000
Page1of3
4. (a) Discusstheprocedurefordeterminingtheweightedmarginalcostofcapital. [7M]
(b) The initial cash outlay of a project is Rs.50,000 and it generates cash in?ows of Rs.20000,
Rs.15000,Rs.25000and10000infouryears. Usingpresentvalueindexmethod,appraiseprof-
itabilityoftheproposedinvestmentassuming10%rateofdiscount. [7M]
UNIT?III
5. (a) ExaminetherelationshipbetweenNIandNOIapproach. [7M]
(b) BabuTradingCompanyhassalesofRs.1Lakh.Thevariablecostsare40%ofthesaleswhilethe
?xedoperatingcostsamountofRs.30000.TheamountofinterestonlongtermdebtisRs.10000.
Youarerequiredtocalculatethecompositeleverageandillustrateitsimpactifsalesincreaseby
5%. [7M]
6. (a) De?ne?nancialleverage.Explainitsimportance. [7M]
(b) ExplaintheconceptofMMtheoryofcapitalstructure. [7M]
UNIT?IV
7. (a) De?neDividend.ExplainitsdeterminingfactorundervariousDividendtheories. [7M]
(b) De?neworkingcapital.Discussthedeterminantsofworkingcapital [7M]
8. (a) Discusstheapproachesfor?nancingcurrentassets. [7M]
(b) DiscusstherelevantapproachonadividenddecisiongivenbyJamesWalteranditslimitations.
[7M]
UNIT?V
9. (a) Describebrie?ythecomponentsofworkingcapital. [7M]
(b) XYZcompanyplanstoachieveannualsalesof1,00,000unitsfortheyear2005.Thefollowingis
thecoststructureofthecompanyaspertheprevious?gures. [7M]
Materials 50%
Labour 20%
Overheads 10%
Thefollowingfurtherparticularsareavailablefromtherecordsofthecompany.
i. Rawmaterialsareexpectedtoremaininstoresforanaverageperiodofonemonthbefore
issuetoproduction.
ii. Finishedgoodsaretostayinthewarehousefortwomonthsonanaveragebeforebeingsold
andsenttocustomers.
iii. Eachunitofproductionwillbeinprocessforonemonthontheaverage.
iv. Thecreditallowedbythesuppliersofrawmaterialisonemonthfromthedateofdelivery
ofmaterials.
v. Debtorsareallowedcreditfortwomonthsfromthedateofsaleofgoods
vi. SellingpriceperunitisRs.9perunit
vii. Productionandsalesfollowaconsistentpatternandtherearenowide?uctuations.
Determinethequantumofworkingcapitalrequiredto?nancetheactivitylevelof1,00,000unit
fortheyear2005.
Page2of3
10. (a) De?necashbudget.Explainitsimportanceinanorganization. [7M]
(b) EconomicEnterprisesrequire95000unitsofcertainitemsannually. ThecostperunitisRs.3.
ThecostperpurchaseorderisRs.300andtheinventorycarryingcostisRs.6perunitperyear.
i. WhatisEOQ? [7M]
ii. Whatshouldthe?rmdoifthesupplierso?erdiscountsasshowninTable3:
Table3
Orderquantity Discount
4500?5999 3%
6000andabove 4%
? ? ? ? ? ? ?
Page3of3
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