Download GTU (Gujarat Technological University) MBA (Master of Business Administration) 2019 Summer 2nd Sem 3529203 Financial Management Previous Question Paper
Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER 2 ? EXAMINATION ? SUMMER 2019
Subject Code:3529203 Date:13/05/2019
Subject Name: Financial Management
Time: 10:30 AM To 01:30 PM Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q. No. Question Text and Description Marks
Q.1 Explain the following terms:
(a) Time Value of Money
(b) Yield To Maturity
(c) Permanent Working Capital
(d) Cost of Capital
(e) Discounted Pay Back Period
(f) Leverages
(g) Price Earning Ratio
14
Q.2 (a) What do you mean by Financial Management? Explain its Profit
Maximization and Wealth Maximization objectives in details.
07
(b) A finance company advertises that it will pay a lump sum of Rs.10,000
at the end of 6 years to investors who deposit annually Rs. 1,000. What
interest rate is implicit in this offer?
07
OR
(b) A company is currently paying a dividend of Rs. 2 per share. Dividend
is expected to grow at 15% annual rate for 3 years, thereafter at 10%
for next 3 years and after which it is expected to grow at 5% forever. If
capitalization rate is 9% what is the intrinsic value of share?
07
Q.3 (a) Give the meaning of Leverage and discuss the types of Leverages in
details.
07
(b) A company belongs to risk class for which capitalization rate is 10%. It
currently has outstanding 25000 shares at Rs. 100 each. The expected
dividend is Rs. 5 per share, net income is Rs. 2,50,000 and investment
is Rs. 5,00,000. Show under M-M assumption the payout of dividend
does not affect the value of firm.
07
OR
Q.3 (a) What do you mean by Dividend and explain the factors affecting
dividend decision in details.
07
(b) Equity (Rs. 10 each)???????????????.15 cr
12% Preference Shares (Rs. 100 each)????????..1 cr
Retained Earnings????????????????..20 cr
11.5% Debentures (Rs. 100 each)??????????..10 cr
07
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Page 1 of 2
Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER 2 ? EXAMINATION ? SUMMER 2019
Subject Code:3529203 Date:13/05/2019
Subject Name: Financial Management
Time: 10:30 AM To 01:30 PM Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q. No. Question Text and Description Marks
Q.1 Explain the following terms:
(a) Time Value of Money
(b) Yield To Maturity
(c) Permanent Working Capital
(d) Cost of Capital
(e) Discounted Pay Back Period
(f) Leverages
(g) Price Earning Ratio
14
Q.2 (a) What do you mean by Financial Management? Explain its Profit
Maximization and Wealth Maximization objectives in details.
07
(b) A finance company advertises that it will pay a lump sum of Rs.10,000
at the end of 6 years to investors who deposit annually Rs. 1,000. What
interest rate is implicit in this offer?
07
OR
(b) A company is currently paying a dividend of Rs. 2 per share. Dividend
is expected to grow at 15% annual rate for 3 years, thereafter at 10%
for next 3 years and after which it is expected to grow at 5% forever. If
capitalization rate is 9% what is the intrinsic value of share?
07
Q.3 (a) Give the meaning of Leverage and discuss the types of Leverages in
details.
07
(b) A company belongs to risk class for which capitalization rate is 10%. It
currently has outstanding 25000 shares at Rs. 100 each. The expected
dividend is Rs. 5 per share, net income is Rs. 2,50,000 and investment
is Rs. 5,00,000. Show under M-M assumption the payout of dividend
does not affect the value of firm.
07
OR
Q.3 (a) What do you mean by Dividend and explain the factors affecting
dividend decision in details.
07
(b) Equity (Rs. 10 each)???????????????.15 cr
12% Preference Shares (Rs. 100 each)????????..1 cr
Retained Earnings????????????????..20 cr
11.5% Debentures (Rs. 100 each)??????????..10 cr
07
Page 2 of 2
11% Term Loan??????????????????..12.5 cr
Next year?s dividend on equity is Rs. 3.60 which is expected to grow at
7% and its market price is Rs. 40. Preference shares redeemable after
10 years currently selling at Rs. 75. Debentures redeemable after 6
years are selling at Rs. 80. Tax rate is 40%. Find WACC under book
value.
Q.4 (a) Give the meaning of Working Capital and discuss the factors affecting
Working Capital Requirements.
07
(b) Calculate (a) the operating leverage, (b) financial leverage and (c)
combined leverage from the following data under situations I and II
and financial plans, A and B.
Installed capacity, 1,000 units
Actual production and sales, 800 units
Selling price, Rs 20 per unit and Variable cost, Rs 15 per unit
Fixed cost: Under situation I, Rs 800 and Under situation II, Rs.1500
Capital Structure Financial Plans
A B
Equity Rs. 5000 Rs. 7000
Debt (0.10 interest) Rs. 5000 Rs. 2000
07
OR
Q.4 (a) Discuss the Traditional Approach with the help of diagram. 07
(b) A Ltd & B. Ltd are identical in all respect except A Ltd issued 12%
debentures of Rs. 30,00,000 while B Ltd issued only equity capital.
Both companies earn 24% before interest and tax on their total assets
of Rs. 50,00,000. Tax rate is 40% and cost of equity is 18%. Find the
value and WACC for both firms using NI and NOI approach.
07
Q.5
Q.5
(a)
(b)
(a)
(b)
A company is considering two mutually exclusive projects. Both
require cash outlay of Rs. 10,000 each. Required rate of return is 10%
and tax rate is 50%. Cash outflows before interest and tax are as below:
A (Rs.) 4000 4000 4000 4000 4000
B (Rs.) 6000 3000 2000 5000 5000
Calculate Pay Back Period for each project.
Calculate Average Rate of Return for each project.
OR
Calculate Net Present Value for each project.
Calculate Internal Rate of Return for each project.
07
07
07
07
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This post was last modified on 19 February 2020