Download JNTUH MBA 2017 July 2nd Semester Financial Management Question Paper

Download JNTUH (Jawaharlal Nehru Technological University Hyderabad) MBA (Master of Business Administration) R16 2017 July Second Semester (2nd Sem) Financial Management Question Paper.

HallTicketNo QuestionPaperCode:CMB008
.
.
MBAIISemesterEndExaminations(Regular)-July,2017
Regulation: .?R16
FINANCIALMANAGEMENT
(MasterofBusinessAdministration)
Time: 3Hours MaxMarks: 70
AnswerONEQuestionfromeachUnit
AllQuestionsCarryEqualMarks
Allpartsofthequestionmustbeansweredinoneplaceonly
UNIT?I
1. (a) De?nethescopeof?nancialmanagement. Whatroleshouldthe?nancialmanagerplayina
modernenterprise? [7M]
(b) Whyistheconsiderationoftimeimportantin?nancialdecisionmaking?Howcantimevaluebe
adjusted?Illustrateyouranswer. [7M]
2. (a) ?Thepro?tmaximizationisnotanoperationallyfeasiblecriterion?.Doyouagree?Illustrateyour
views. [7M]
(b) Mr.SaihadannualearningsofRs.45,000in2011.By2018,hisannualearningshavegrownto
Rs.67,550.Whathasbeenthecompoundannualrateofgrowthinhisearnings? [7M]
UNIT?II
3. (a) Despiteitsweaknesses,thepaybackperiodmethodispopularinpractice?Whatarethereasons
foritspopularity? [7M]
(b) AprojectcostsRs.81,000andisexpectedtogeneratenetcashin?owofRs. 40,000,Rs,35,000
andRs.30,000overitslifeof3years.Calculatetheinternalrateofreturnoftheproject. [7M]
4. (a) Whyshouldinvestmentdecisionsbeseparatedfrom?nancingdecisions?Illustrateyouranswer.
[7M]
(b) AcompanyhaspaidadividendofRs.3pershareforlast20yearsanditisexpectedtocontinue
sointhefuture.Thecompany?ssharehadsoldforRs.33twentyyearsago,anditsmarketprice
isalsoRs.33.Whatisthecostoftheshare? [7M]
UNIT?III
5. (a) Whatisthedegreeofcombinedleverage?Whatdoyouthinkistheappropriatecombinationof
operatingand?nancialleverage? [7M]
(b) Acompanyhassetitstargetdebt-equityratioat1:1andtargetpayoutratioat40%. The
companywantstoachieveagrowthrateof20%p.a.Thecompanyisexpectingbeforetaxreturn
onassetsof21%. Itssales-toassetsratiois1.8times. Thecurrentinterestrateis12%. The
corporatetaxrateforthecompanyis35%.Canthecompanysustainitsintendedgrowth?What
shoulditdotoachievethegrowthrate? [7M]
Page1of3
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HallTicketNo QuestionPaperCode:CMB008
.
.
MBAIISemesterEndExaminations(Regular)-July,2017
Regulation: .?R16
FINANCIALMANAGEMENT
(MasterofBusinessAdministration)
Time: 3Hours MaxMarks: 70
AnswerONEQuestionfromeachUnit
AllQuestionsCarryEqualMarks
Allpartsofthequestionmustbeansweredinoneplaceonly
UNIT?I
1. (a) De?nethescopeof?nancialmanagement. Whatroleshouldthe?nancialmanagerplayina
modernenterprise? [7M]
(b) Whyistheconsiderationoftimeimportantin?nancialdecisionmaking?Howcantimevaluebe
adjusted?Illustrateyouranswer. [7M]
2. (a) ?Thepro?tmaximizationisnotanoperationallyfeasiblecriterion?.Doyouagree?Illustrateyour
views. [7M]
(b) Mr.SaihadannualearningsofRs.45,000in2011.By2018,hisannualearningshavegrownto
Rs.67,550.Whathasbeenthecompoundannualrateofgrowthinhisearnings? [7M]
UNIT?II
3. (a) Despiteitsweaknesses,thepaybackperiodmethodispopularinpractice?Whatarethereasons
foritspopularity? [7M]
(b) AprojectcostsRs.81,000andisexpectedtogeneratenetcashin?owofRs. 40,000,Rs,35,000
andRs.30,000overitslifeof3years.Calculatetheinternalrateofreturnoftheproject. [7M]
4. (a) Whyshouldinvestmentdecisionsbeseparatedfrom?nancingdecisions?Illustrateyouranswer.
[7M]
(b) AcompanyhaspaidadividendofRs.3pershareforlast20yearsanditisexpectedtocontinue
sointhefuture.Thecompany?ssharehadsoldforRs.33twentyyearsago,anditsmarketprice
isalsoRs.33.Whatisthecostoftheshare? [7M]
UNIT?III
5. (a) Whatisthedegreeofcombinedleverage?Whatdoyouthinkistheappropriatecombinationof
operatingand?nancialleverage? [7M]
(b) Acompanyhassetitstargetdebt-equityratioat1:1andtargetpayoutratioat40%. The
companywantstoachieveagrowthrateof20%p.a.Thecompanyisexpectingbeforetaxreturn
onassetsof21%. Itssales-toassetsratiois1.8times. Thecurrentinterestrateis12%. The
corporatetaxrateforthecompanyis35%.Canthecompanysustainitsintendedgrowth?What
shoulditdotoachievethegrowthrate? [7M]
Page1of3
6. (a) Describethetraditionalviewontheoptimumcapitalstructure.Compareandcontrastthisview
withtheNOIapproachandtheNIapproach. [7M]
(b) EmpireLtdneedsRs.1,000,000tobuildanewfactory,whichwillyieldEBITofRs.150,000per
year.Thecompanyhastochoosebetweentwoalternative?nancingplans:75%equityand25%
debtor50%equityand50%debt. Underthe?rstplan,sharescanbesoldatRs.50pershare
andtheinterestrateondebtwillbe14%.Underthesecondplan,sharescanbesoldforRs.40
pershareandtheinterestrateondebtwillbe16%.DeterminetheEPSforeachplanassuming
a35%taxrate. [7M]
UNIT?IV
7. (a) ?Thecontentionthatdividendshaveanimpactonthesharepricehasbeencharacterizedas
thebird-in-the-handargument?. Explaintheessentialofthisargument. Whythisargumentis
consideredfallacious? [7M]
(b) PolychemCo?scurrentcapitalstructureason31march,2016isasfollows: [7M]
Table1
Rs.Crore
Sharecapital(Rs.100par,2croreshares) 200
Sharepremium 100
Reservesandsurpluses 190
490
Thecurrentmarketpriceofthecompany?ssharesisRs. 140pershare. TheEPSfortheyear
2015wasRs.17.,thecompanyhasbeenpayingaconstantdividendofRs.6.50pershareforthe
lasttenyears.Whatshallbethee?ectonEPS,dividend,sharepriceandcapitalstructureifthe
company
i. splitsitssharestwo-for-oneor
ii. declaresabonusissueofone-for-twenty?
8. (a) Whatarethedi?erentpayoutmethods?Howdoshareholdersreacttothesemethods? [7M]
(b) AcompanyearnsRs. 10pershareataninternalrateof15%. The?rmhasapolicyofpaying
40%earningsasdividends.Iftherequiredrateofreturnis10%,Determinethepriceoftheshare
under ] [7M]
i. Walter?smodel
ii. Gordon?smodel
UNIT?V
9. (a) DescribetheimportantfeaturesoftheTandonCommittee?srecommendations. [7M]
(b) Acompanyhasa15%requiredrateofreturn.Itiscurrentlysellingontermofnet10.Thecredit
salesofthecompanyareRs. 120croreayear. Thecompany?scollectionperiodcurrentlyis60
days. Ifcompanyo?eredtermsof?2/10,net30?,60%ofitscustomerswilltakethediscount
andthecollectionperiodwillbereducedto40days.Shouldthetermsbechanged? [7M]
Page2of3
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HallTicketNo QuestionPaperCode:CMB008
.
.
MBAIISemesterEndExaminations(Regular)-July,2017
Regulation: .?R16
FINANCIALMANAGEMENT
(MasterofBusinessAdministration)
Time: 3Hours MaxMarks: 70
AnswerONEQuestionfromeachUnit
AllQuestionsCarryEqualMarks
Allpartsofthequestionmustbeansweredinoneplaceonly
UNIT?I
1. (a) De?nethescopeof?nancialmanagement. Whatroleshouldthe?nancialmanagerplayina
modernenterprise? [7M]
(b) Whyistheconsiderationoftimeimportantin?nancialdecisionmaking?Howcantimevaluebe
adjusted?Illustrateyouranswer. [7M]
2. (a) ?Thepro?tmaximizationisnotanoperationallyfeasiblecriterion?.Doyouagree?Illustrateyour
views. [7M]
(b) Mr.SaihadannualearningsofRs.45,000in2011.By2018,hisannualearningshavegrownto
Rs.67,550.Whathasbeenthecompoundannualrateofgrowthinhisearnings? [7M]
UNIT?II
3. (a) Despiteitsweaknesses,thepaybackperiodmethodispopularinpractice?Whatarethereasons
foritspopularity? [7M]
(b) AprojectcostsRs.81,000andisexpectedtogeneratenetcashin?owofRs. 40,000,Rs,35,000
andRs.30,000overitslifeof3years.Calculatetheinternalrateofreturnoftheproject. [7M]
4. (a) Whyshouldinvestmentdecisionsbeseparatedfrom?nancingdecisions?Illustrateyouranswer.
[7M]
(b) AcompanyhaspaidadividendofRs.3pershareforlast20yearsanditisexpectedtocontinue
sointhefuture.Thecompany?ssharehadsoldforRs.33twentyyearsago,anditsmarketprice
isalsoRs.33.Whatisthecostoftheshare? [7M]
UNIT?III
5. (a) Whatisthedegreeofcombinedleverage?Whatdoyouthinkistheappropriatecombinationof
operatingand?nancialleverage? [7M]
(b) Acompanyhassetitstargetdebt-equityratioat1:1andtargetpayoutratioat40%. The
companywantstoachieveagrowthrateof20%p.a.Thecompanyisexpectingbeforetaxreturn
onassetsof21%. Itssales-toassetsratiois1.8times. Thecurrentinterestrateis12%. The
corporatetaxrateforthecompanyis35%.Canthecompanysustainitsintendedgrowth?What
shoulditdotoachievethegrowthrate? [7M]
Page1of3
6. (a) Describethetraditionalviewontheoptimumcapitalstructure.Compareandcontrastthisview
withtheNOIapproachandtheNIapproach. [7M]
(b) EmpireLtdneedsRs.1,000,000tobuildanewfactory,whichwillyieldEBITofRs.150,000per
year.Thecompanyhastochoosebetweentwoalternative?nancingplans:75%equityand25%
debtor50%equityand50%debt. Underthe?rstplan,sharescanbesoldatRs.50pershare
andtheinterestrateondebtwillbe14%.Underthesecondplan,sharescanbesoldforRs.40
pershareandtheinterestrateondebtwillbe16%.DeterminetheEPSforeachplanassuming
a35%taxrate. [7M]
UNIT?IV
7. (a) ?Thecontentionthatdividendshaveanimpactonthesharepricehasbeencharacterizedas
thebird-in-the-handargument?. Explaintheessentialofthisargument. Whythisargumentis
consideredfallacious? [7M]
(b) PolychemCo?scurrentcapitalstructureason31march,2016isasfollows: [7M]
Table1
Rs.Crore
Sharecapital(Rs.100par,2croreshares) 200
Sharepremium 100
Reservesandsurpluses 190
490
Thecurrentmarketpriceofthecompany?ssharesisRs. 140pershare. TheEPSfortheyear
2015wasRs.17.,thecompanyhasbeenpayingaconstantdividendofRs.6.50pershareforthe
lasttenyears.Whatshallbethee?ectonEPS,dividend,sharepriceandcapitalstructureifthe
company
i. splitsitssharestwo-for-oneor
ii. declaresabonusissueofone-for-twenty?
8. (a) Whatarethedi?erentpayoutmethods?Howdoshareholdersreacttothesemethods? [7M]
(b) AcompanyearnsRs. 10pershareataninternalrateof15%. The?rmhasapolicyofpaying
40%earningsasdividends.Iftherequiredrateofreturnis10%,Determinethepriceoftheshare
under ] [7M]
i. Walter?smodel
ii. Gordon?smodel
UNIT?V
9. (a) DescribetheimportantfeaturesoftheTandonCommittee?srecommendations. [7M]
(b) Acompanyhasa15%requiredrateofreturn.Itiscurrentlysellingontermofnet10.Thecredit
salesofthecompanyareRs. 120croreayear. Thecompany?scollectionperiodcurrentlyis60
days. Ifcompanyo?eredtermsof?2/10,net30?,60%ofitscustomerswilltakethediscount
andthecollectionperiodwillbereducedto40days.Shouldthetermsbechanged? [7M]
Page2of3
10. (a) Whatistheroleofcredittermsandcreditstandardsinthecreditpolicyofa?rm? [7M]
(b) Acompanyhasacentralbillingsystem.ItsdailycollectionsonanaverageareRs.500,000.The
totaltimeforadministeringthecollectionis6days. [7M]
i. Ifa?rm?srequiredrateofreturnis10%,whatisthecostofthesystemtothe?rm?
ii. Ifthemanagementdesignsalock-boxsystemthatreducesthelagby3days,whatisthe
reductionincashbalances?
? ? ? ? ? ? ?
Page3of3
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