Download GTU (Gujarat Technological University) MBA (Master of Business Administration) 2018 Summer 2nd Sem 3529203 Financial Management Previous Question Paper
Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER (2) ? EXAMINATION ? SUMMER 2018
Subject Code: 3529203 Date: 25/05/2018
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.1 Explain the following terms:
1) Discounted Cash Flow
2) Retained Earnings
3) Cost of Capital
4) Agency Problem
5) Working Capital
6) Operating Cycle
7) Doubling Period
14
Q.2 (A) What do you mean by Financial Management? Discuss various Functions of financial
management in detail.
07
Q.2 (B) Suppose Mr. Nehal deposits at each year starting Rs. 750, Rs. 1000, Rs. 1250, Rs. 1500 and
Rs. 1750 in his saving bank account 1 to 5 years respectively. Calculate the compound value
of deposits at the end of 5 years. Interest rate is 6%.
07
OR
Q.2 (B) ABC company issued 10% bonds with a face value of Rs. 1000 for a maturity period of 4
years. Required rate of return is (A) 10%, (B) 12% and (C) 8%.
Determine the value of bond in each situation.
07
Q.3 (A) Explain Capital Budgeting and also discuss importance of Capital Budgeting. 07
Q.3 (B) Cash inflows of Kayaan Projects Pvt. Ltd. Along with Cash outflows are given below.
Year 0 1 2 3 4 5
Cash Outflows 1,50,000 30,000 -- -- -- --
Net Cash Inflows after
depreciation and Tax
-- 20,000 30,000 60,000 80,000 30,000
The salvage value at the end of 5
th
year is Rs. 40,000. Calculate Net Present Value of this
Project at 10% Discounting Rate and also through light on the acceptance of this Project.
07
OR
Q.3 (A) What is Pay Back Method? State its Advantages and Limitations in detail. 07
Q.3 (B) From the following information of Tavishee & Kashvee Pvt. Ltd. Determine Overall Cost of
Capital by using Book value Rates and Market value Rates.
Sources of Finance Book Value Market Value Cost Percentage
Equity share 3,00,000
1,00,000
}
6,00,000
15%
Retained Earnings 13%
Preference share 50,000 60,000 8%
Debenture 2,00,000 1,90,000 6%
Total 6,50,000 8,50,000
07
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Page 1 of 3
Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER (2) ? EXAMINATION ? SUMMER 2018
Subject Code: 3529203 Date: 25/05/2018
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.1 Explain the following terms:
1) Discounted Cash Flow
2) Retained Earnings
3) Cost of Capital
4) Agency Problem
5) Working Capital
6) Operating Cycle
7) Doubling Period
14
Q.2 (A) What do you mean by Financial Management? Discuss various Functions of financial
management in detail.
07
Q.2 (B) Suppose Mr. Nehal deposits at each year starting Rs. 750, Rs. 1000, Rs. 1250, Rs. 1500 and
Rs. 1750 in his saving bank account 1 to 5 years respectively. Calculate the compound value
of deposits at the end of 5 years. Interest rate is 6%.
07
OR
Q.2 (B) ABC company issued 10% bonds with a face value of Rs. 1000 for a maturity period of 4
years. Required rate of return is (A) 10%, (B) 12% and (C) 8%.
Determine the value of bond in each situation.
07
Q.3 (A) Explain Capital Budgeting and also discuss importance of Capital Budgeting. 07
Q.3 (B) Cash inflows of Kayaan Projects Pvt. Ltd. Along with Cash outflows are given below.
Year 0 1 2 3 4 5
Cash Outflows 1,50,000 30,000 -- -- -- --
Net Cash Inflows after
depreciation and Tax
-- 20,000 30,000 60,000 80,000 30,000
The salvage value at the end of 5
th
year is Rs. 40,000. Calculate Net Present Value of this
Project at 10% Discounting Rate and also through light on the acceptance of this Project.
07
OR
Q.3 (A) What is Pay Back Method? State its Advantages and Limitations in detail. 07
Q.3 (B) From the following information of Tavishee & Kashvee Pvt. Ltd. Determine Overall Cost of
Capital by using Book value Rates and Market value Rates.
Sources of Finance Book Value Market Value Cost Percentage
Equity share 3,00,000
1,00,000
}
6,00,000
15%
Retained Earnings 13%
Preference share 50,000 60,000 8%
Debenture 2,00,000 1,90,000 6%
Total 6,50,000 8,50,000
07
Page 2 of 3
Q.4 (A) Determine various Factors influencing Capital Structure. 07
Q.4 (B) Mihir Auto Pvt Ltd, a petrol engine manufacturer buys an item in lots of 2,000 units which is
a three month requirement. The cost per unit is Rs. 90 and the ordering cost is Rs. 180 per
batch order. The inventory carrying cost is estimated at 20% of the overage inventory
investment.
a) What is the Annual Total Cost of existing inventory policy?
b) How much money can be saved by using Economic Order Quantity (EOQ)?
07
OR
Q.4 (A) Discuss the differentiation between Operating Leverage and Financial leverage. 07
Q.4 (B) Kahan Industries Ltd. Pays a dividend Rs. 2 per share with a growth rate of 7%. The risk free
rate is 9% and the market rate of return is 13%. The company has a beta factor of 1.50.
However due to a decision of the finance manager, beta is likely to increase to 1.75. Find out
the present as well as the likely value of the share after the decision.
07
Q.5 Following details are given related to operation and capital structure of Sharaan Ltd.
Particulars Situation-A Situation-B
Installed Capacity 1,000 Units 1,000 Units
Actual Production and Sales 800 Units 800 Units
Selling Price per Unit Rs. 20 Rs. 20
Variable cost per Unit Rs. 15 Rs. 15
Fixed Cost Rs. 800 Rs. 1500
Capital Structure Equity Capital Debt Capital
Financial Plan I 5,000 5,000
Financial Plan II 7,000 2,000
Cost of debt is 10%
(A) Calculate Financial Leverage, Operating Leverage and Combine leverage under Situation A
with Financial Plan I
07
(B) Calculate Financial Leverage, Operating Leverage and Combine Leverage under Situation B
with Financial Plan I
07
OR
(A) Calculate Financial Leverage, Operating Leverage and Combine leverage under Situation A
with Financial Plan II
07
(B) Calculate Financial Leverage, Operating Leverage and Combine Leverage under Situation B
with Financial Plan II
07
*************
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Page 1 of 3
Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER (2) ? EXAMINATION ? SUMMER 2018
Subject Code: 3529203 Date: 25/05/2018
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.1 Explain the following terms:
1) Discounted Cash Flow
2) Retained Earnings
3) Cost of Capital
4) Agency Problem
5) Working Capital
6) Operating Cycle
7) Doubling Period
14
Q.2 (A) What do you mean by Financial Management? Discuss various Functions of financial
management in detail.
07
Q.2 (B) Suppose Mr. Nehal deposits at each year starting Rs. 750, Rs. 1000, Rs. 1250, Rs. 1500 and
Rs. 1750 in his saving bank account 1 to 5 years respectively. Calculate the compound value
of deposits at the end of 5 years. Interest rate is 6%.
07
OR
Q.2 (B) ABC company issued 10% bonds with a face value of Rs. 1000 for a maturity period of 4
years. Required rate of return is (A) 10%, (B) 12% and (C) 8%.
Determine the value of bond in each situation.
07
Q.3 (A) Explain Capital Budgeting and also discuss importance of Capital Budgeting. 07
Q.3 (B) Cash inflows of Kayaan Projects Pvt. Ltd. Along with Cash outflows are given below.
Year 0 1 2 3 4 5
Cash Outflows 1,50,000 30,000 -- -- -- --
Net Cash Inflows after
depreciation and Tax
-- 20,000 30,000 60,000 80,000 30,000
The salvage value at the end of 5
th
year is Rs. 40,000. Calculate Net Present Value of this
Project at 10% Discounting Rate and also through light on the acceptance of this Project.
07
OR
Q.3 (A) What is Pay Back Method? State its Advantages and Limitations in detail. 07
Q.3 (B) From the following information of Tavishee & Kashvee Pvt. Ltd. Determine Overall Cost of
Capital by using Book value Rates and Market value Rates.
Sources of Finance Book Value Market Value Cost Percentage
Equity share 3,00,000
1,00,000
}
6,00,000
15%
Retained Earnings 13%
Preference share 50,000 60,000 8%
Debenture 2,00,000 1,90,000 6%
Total 6,50,000 8,50,000
07
Page 2 of 3
Q.4 (A) Determine various Factors influencing Capital Structure. 07
Q.4 (B) Mihir Auto Pvt Ltd, a petrol engine manufacturer buys an item in lots of 2,000 units which is
a three month requirement. The cost per unit is Rs. 90 and the ordering cost is Rs. 180 per
batch order. The inventory carrying cost is estimated at 20% of the overage inventory
investment.
a) What is the Annual Total Cost of existing inventory policy?
b) How much money can be saved by using Economic Order Quantity (EOQ)?
07
OR
Q.4 (A) Discuss the differentiation between Operating Leverage and Financial leverage. 07
Q.4 (B) Kahan Industries Ltd. Pays a dividend Rs. 2 per share with a growth rate of 7%. The risk free
rate is 9% and the market rate of return is 13%. The company has a beta factor of 1.50.
However due to a decision of the finance manager, beta is likely to increase to 1.75. Find out
the present as well as the likely value of the share after the decision.
07
Q.5 Following details are given related to operation and capital structure of Sharaan Ltd.
Particulars Situation-A Situation-B
Installed Capacity 1,000 Units 1,000 Units
Actual Production and Sales 800 Units 800 Units
Selling Price per Unit Rs. 20 Rs. 20
Variable cost per Unit Rs. 15 Rs. 15
Fixed Cost Rs. 800 Rs. 1500
Capital Structure Equity Capital Debt Capital
Financial Plan I 5,000 5,000
Financial Plan II 7,000 2,000
Cost of debt is 10%
(A) Calculate Financial Leverage, Operating Leverage and Combine leverage under Situation A
with Financial Plan I
07
(B) Calculate Financial Leverage, Operating Leverage and Combine Leverage under Situation B
with Financial Plan I
07
OR
(A) Calculate Financial Leverage, Operating Leverage and Combine leverage under Situation A
with Financial Plan II
07
(B) Calculate Financial Leverage, Operating Leverage and Combine Leverage under Situation B
with Financial Plan II
07
*************
Page 3 of 3
FVIF Table
FVIFA Table
PVIF Table
PVIFA Table
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This post was last modified on 19 February 2020