Download GTU (Gujarat Technological University) MBA (Master of Business Administration) 2015 Winter 2nd Sem 820003 Financial Management Fm Previous Question Paper
Seat No.: ________ Enrolment No.______________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA - SEMESTER ?II - EXAMINATION ? WINTER 2015
Subject code: 820003 Date: 19/12/2015
Subject Name: Financial Management (FM)
Time: 02.30 PM TO 05.30 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 (a) Briefly explain the factors that determine the working capital needs of
a firm.
07
(b) Give arguments to support the view that dividends are relevant 07
Q.2 (a) What are the factors that influence the dividend policy of a firm 07
(b) Explain the main objectives of credit policy? Discuss the optimum
credit policy
07
OR
(b) What are the sources of working capital finance? 07
Q.3 (a) Contrast the salient features of the traditional and modern approaches
to financial management?
07
(b)
An investment promises to pay Rs.2000 at the end of each year for the
next 3 years and Rs.1000 at the end of each year for years 4 through
year 7.
Required
1.What maximum amount will you pay for such investment if your
required rate of return is 10 percent?
2. If the payments are received in the beginning of the year, what
maximum amount will you pay for the investment?
07
OR
Q.3 (a) Three bonds have face value of Rs. 1000, coupon rate of 10 percent
and maturity of 5 years. One pays interest annually, one pays interest
half-yearly, and one pays interest quarterly. Calculate the prices of
bonds if the required rate of return is 12 percent.
07
(b) Discuss the important functions performed by financial markets. 07
Q.4 (a) A firm is considering the following two mutually exclusive
investments
Cashflows
Year-0 Year-1 Year-2 Year-3
A -25000 15000 15000 25640
B -28000 12672 12672 12672
The cost of capital is 12 percent. Compute the NPV and IRR for each
project. Which project should be undertaken?
07
(b) Explain the different approaches for estimation of Cost of Equity 07
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Seat No.: ________ Enrolment No.______________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA - SEMESTER ?II - EXAMINATION ? WINTER 2015
Subject code: 820003 Date: 19/12/2015
Subject Name: Financial Management (FM)
Time: 02.30 PM TO 05.30 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 (a) Briefly explain the factors that determine the working capital needs of
a firm.
07
(b) Give arguments to support the view that dividends are relevant 07
Q.2 (a) What are the factors that influence the dividend policy of a firm 07
(b) Explain the main objectives of credit policy? Discuss the optimum
credit policy
07
OR
(b) What are the sources of working capital finance? 07
Q.3 (a) Contrast the salient features of the traditional and modern approaches
to financial management?
07
(b)
An investment promises to pay Rs.2000 at the end of each year for the
next 3 years and Rs.1000 at the end of each year for years 4 through
year 7.
Required
1.What maximum amount will you pay for such investment if your
required rate of return is 10 percent?
2. If the payments are received in the beginning of the year, what
maximum amount will you pay for the investment?
07
OR
Q.3 (a) Three bonds have face value of Rs. 1000, coupon rate of 10 percent
and maturity of 5 years. One pays interest annually, one pays interest
half-yearly, and one pays interest quarterly. Calculate the prices of
bonds if the required rate of return is 12 percent.
07
(b) Discuss the important functions performed by financial markets. 07
Q.4 (a) A firm is considering the following two mutually exclusive
investments
Cashflows
Year-0 Year-1 Year-2 Year-3
A -25000 15000 15000 25640
B -28000 12672 12672 12672
The cost of capital is 12 percent. Compute the NPV and IRR for each
project. Which project should be undertaken?
07
(b) Explain the different approaches for estimation of Cost of Equity 07
2/2
OR
Q.4 (a) A company is considering a proposal of installing a drying equipment.
The equipment would involve a cash outlay of Rs. 600000 and working
capital of Rs80000. The expected life of the project is 4 years with an
estimated salvage value of Rs.250000 at the end of its life. working
capital will be liquidated at par at the end of equipment life.
Depreciation rate is 20% WDV. Tax rate is 30%. The estimated before
tax cash flows are given below.
Yr 1 2 3 4
EBDIT 150000 150000 250000 240000
Required:
Estimate cash flows of the project and compute NPV if the cost of
capital is 12 percent.
07
(b) Max Ltd., and all equity firm, is evaluating the following projects:
Project Beta Expected Return(%
P 0.6 13
Q 0.9 14
R 1.5 16
S 1.5 20
Risk free rate is 10 percent and the expected market premium is 8
percent. Max?s cost of capital is 18 percent. Which projets would be
accepted or rejected incorrectly on the basis of the firm?s cost of capital
as hurdle rate?
07
Q.5 (a) Consider the following information;
Rs. In lakh
EBIT 1120
PBT 320
Fixed cost 700
Calculate DOL, DFL and DCL
07
(b) What are the different sources of long term finance? 07
OR
Q.5 (a) Describe the traditional view on the optimum capital structure.
Compare and contrast this view with the NOI approach and NI
approach.
07
(b) Define a lease. How does it differ from hire purchase? What are the
cash flow consequences of a lease?
07
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This post was last modified on 19 February 2020